Capitalizing on the popularity of platinum cards, bank issuers are slapping on eye-popping fees.
Platinum credit cards may come with higher credit limits, but many consumers are paying a price for this benefit. According to RAM Research Corp., issuers are charging as much as $35 to consumers who exceed their credit limits, even when they do so by only $1.
"The issuers have the leeway to do this," said Robert B. McKinley, president of the Frederick, Md., research firm. "It is what the market will bear."
Most consumers do not read the fee disclosures that accompany their credit card bills, Mr. McKinley said.
Mr. McKinley's firm has researched card fees and found that platinum products charge much higher penalties than gold or standard ones. On average, fees for platinum cards are 31% higher than on other types.
"Ten years ago, these fees were cost-driven," Mr. McKinley said. "Today, they have become an integral part of the revenue stream."
Over-the-limit fees on platinum cards are $24.45 on average, compared to $18.66 for other cards. Late-payment fees for platinum cards average $25.34, versus $19.42 for other cards. Cash-advance fees on platinum cards average 27% higher.
"Most issuers are abandoning their gold programs and going right for the platinum, and for some reason it strikes a chord with consumers," Mr. McKinley said. "Some issuers are getting their products pretty darn close to the American Express benefits, which have been pared down each year."
American Express Co. was the first card issuer to introduce platinum, and its super-premium product carries far more benefits than most bank cards. It is also the most exclusive card, granted only to people with high incomes.
Generally, platinum cards are the best deal banks offer in terms of interest rates. The top 10 platinum credit card issuers charge 13.24% on average, less than on other types of card loans.
Among those top issuers, Capital One Financial Corp. offers the platinum card with the lowest interest rate, 9%. NationsBank Corp. charges the highest rate, 16.4%, according to RAM Research.
Mr. McKinley said he believes issuers are cashing in on the cachet of platinum cards. Because the products are new and appealing, banks can price them differently, he said.
"In the past, banks have charged the same fees across their portfolio, but now there is some differential between newer products and older fees," Mr. McKinley said.
About 6% of a bank's card customers incur such fees, Mr. McKinley said. "When 6% of your customers are consistently late, such fees are considered a revenue stream."
