BIRMINGHAM, Ala.-To determine how aggressive banks may be at recouping overdraft revenue losses, a glance at their reaction to the CARD Act sheds some insight, suggests one expert.
"[Banks] always find a way to make up whatever revenue they are going to lose," LowCards.com CEO Bill Hardekopf said. "Restrict them from making money over here, and they will make money over there."
According to Pew Charitable Trusts, the median annual fee on bank credit cards jumped 18% to $59 between July 2009 and March 2010. Banks have a big gap to make up, as the CARD Act is expected to reduce fee income by $390 million annually by some estimates. But CUs have been aggressive with card pricing as well, and CU median annual fees soared 67% to $25 between July 2009 and March 2010. Still, analysts are mixed on whether new pressures will prompt CUs to make changes in credit card pricing. Hardekopf, however, is clear on what banks are willing to do, pointing to some of the Pew study's findings:
• Overall, banks' purchase interest rates have increased 30% between December 2008 and March 2010.
• Some issuers no longer list the amount and terms of the penalty rate in the terms and conditions.
• No surveyed banks offered a fixed rate on any credit card.
• 23% of surveyed bank cards put limitations on cardholders, preventing them from collecting rewards if there is a late payment or penalty on their account.
