It's a fee frenzy among U.S. credit card issuers as American cardholders encounter new fees and escalating existing fees. New fees such as foreign transaction surcharges, inactivity fees, account closing fees, balance transfer fees, customer service fees and monthly annual fees in addition to annual fees are beginning to surface. Late payment fees now average $24.33 across the industry while average fees for going over the credit limit now stand at $23.65. Most major issuers now charge $29 for being late or being over-limit. By comparison five years ago the average late fee was $11.97 and the average over-limit fee was $12.57. The fee frenzy is translating into the bottom line for card issuers. According to CardWeb's CardData (http://www.carddata.com cardholder fee income grew three times more than interest income last year. Over the past five years, cardholder fee income surged by nearly 160%, from $7.3 billion in 1994 to $18.9 billion in 1998. Meanwhile cardholder interest revenues grew 67% over the same period, from $34.8 billion to $58.1 billion.
FEE MISTAKE Providian says all the fuss over its credit card practices was simply a computer glitch. The card issuer says the "programming error", which occurred over a period of months, resulted in the erroneous billing of late fees related to specific weekend days. The issuer says the problem is now fixed with steps in place to provide $20 million in refunds to affected customers. Neverthless Providian still faces several consumer lawsuits over its credit card practices. The consumer lawsuits have resulted in shareholder lawsuits. The lawsuits followed an investigation by the San Francisco Attorney General's office for alleged fraud. Providian was also recently sued for trademark infringement by NextCard. NextCard claims that Providian deliberately copied one of NextCard's banner advertisements in an attempt to mislead Internet users into clicking onto Providian's Web site rather than NextCard's Web site.
THE KING CARD
The Elvis Presley credit card has been resurrected! Previously issued by Memphis-based Leader Federal Bank, the card will now be offered by MBNA America. Elvis Presley Enterprises Inc. announced this month it has signed an affinity card deal with MBNA America to issue the official 'Elvis Presley VISA' credit card. The new card will benefit the Elvis Presley Charitable Foundation's Presley Place, a transitional-housing project that will provide homeless families up to one year of rent-free housing, child day care, job training and counseling, and financial guidance. The Elvis Presley Charitable Foundation was formed by Elvis Presley Enterprises to support various charitable endeavors. EPE is based in Memphis, with additional offices in Los Angeles. It manages the estate of Elvis Presley, including his famed home, Graceland, and its related attractions in Memphis, which include the new Heartbreak Hotel and Elvis Presley's Memphis restaurant/nightclub on Beale Street. Last year Bank of Scotland introduced an 'Elvis MasterCard' for British fans.
GOING PREMIER
Sears, Roebuck and Co. has decided to reward its best customers starting this month. The new 'Sears Premier Card' is designed to recognize and reward customers who have made 'Sears Card' purchases totaling at least $600 in the previous 12 months. A newly designed blue and gold credit card will replace the current 'Sears Card' held by customers who meet 'Sears Premier Card' purchasing criteria. Sears will begin mailing welcome kits this month. 'Premier' cardholders will also receive priority in-home service calls, special preview shopping days prior to key sales events and exclusive money-saving offers. Sears will review all 'Sears Card' accounts semi-annually to determine which customers meet the criteria for upgrades to 'Sears Premier Card'. Customers can use their 'Sears Premier Card' at all Sears department stores, Sears Hardware, Sears and Budget Rental Cars, Sears Auto Centers, Sears authorized dealer stores, HomeLife Furniture Stores and Orchard Supply Hardware. In addition, the 'Sears Premier Card' is also accepted for purchases at Sears Shop at Home catalogs,1-800-FLOWERS, Sears Parts and Services and for purchases made through the Sears Web site.
GOING GREEN
Irish American mailboxes are going green this month. MBNA America, one of the nation's top five card issuers, is hitting up the mailboxes of Irish Americans with the new Emerald Platinum Plus MasterCard. The card offers no special benefits for those of Irish descent except MBNA's claim "it is taking part of Ireland's future through its new office in Dublin". The 'Emerald' card offers a 2.9% intro APR through the end of this year for balance transfers and cash advances. The go-to interest rate and the interest rate for new purchases is a fixed 12.99%. MBNA emphasizes in its current offer there are no transaction fees for initial balance transfers. MBNA has also been trimming back its credit line offers. The Emerald card features a $50,000 credit limit offer instead of the $100,000 credit limit formerly offered by MBNA on its Platinum Plus card products.
NEAT COMPANY CARD
The PocketCard is here. An Illinois firm and a secured card specialist unveiled an new, innovative business card program this month for companies that frequently provide cash advances or reimburses employees for expenses. PocketCard, Inc. is offering the new VISA card which enables companies to have flexible control over the card's spending limit. Under the 'PocketCard' VISA program, the employer funds the program by transferring money from the company's bank account into a 'PocketCard' virtual account. The funds are held by First National Bank of Brookings, South Dakota, which specializes in sub-prime and secured VISA and MasterCards. The funds are then made immediately available to each employee with a 'PocketCard', but the employer sets individual limits for each card. These limits, however, can be changed at any time, in real-time, by the company's designated managers. Whenever an employee reaches the limit of his or her allocation, the card will not be accepted for purchases until the account is replenished. The employer can also review all card transactions at any time by accessing the account at PocketCard's web site. The employer also has the option to let any or all cardholders access funds through an ATM. There is a $20 annual fee for a business 'PocketCard' program. The fee includes one employer or sponsor card and one employee or spender card. Each additional employee card costs $2.50.
BIZ MILES Small business owners can now get American Airlines miles for purchases made by their employees. Up till now only Northwest Airlines offered such a program to small businesses. Citibank and American Airlines recently launched a business card version of its 'Citibank AAdvantage' bank credit card. The 'Citibank Platinum Select AAdvantage Business Card' offers one 'American AAdvantage' mile for every dollar spent, up to 150,000 miles per calendar year. Awards earned on purchases made by employees accumulate toward the business owner's 'American AAdvantage' frequent flyer account. The business owner can open an account with up to nine additional cards for use by employees. Cardholders also qualify for discounts on computer equipment, automobile rentals and hotel stays. Other special benefits include 'Reduced Mileage Awards' and the opportunity to earn double miles for stays at Wyndham Hotels. The new 'Citibank Platinum Select AAdvantage Business Card' carries a $75 annual fee, plus $25 for eachadditional card, and an APR of Prime + 9.9%.
DELTA MILES
Accelerate your march to Delta elite frequent flyer status with a new credit card from American Express. American Express and Delta Air Lines have launched the 'Platinum Delta SkyMiles Credit Card from American Express'. The 'Platinum Delta SkyMiles Credit Card' has an annual fee of $135. The fee is $80 for cardholders who also carry an 'American Express Personal Card', 'Gold Card' or 'Platinum Card' account issued in their names. The interest rate for purchases is Prime +9.99%. Benefits of the program include free companion certificate each year upon renewal; 10,000 bonus 'SkyMiles' plus 5,000 base miles for new cardholders; 10,000 extra base miles if card volume exceeds $25,000 annually; and double miles for every Delta purchase.
WATCH OUT
A South Dakota-based sub-prime card issuer is promoting its 'ACE VISA' credit card which requires applicants to charge a $300 personal finance educational program, a $19.00 processing fee and a $49.00 annual fee in return for a "guaranteed" $400 minimum credit line. According to CardWeb's on-line marketing intelligence service CardWatch, United Credit National Bank of Sioux Falls is also promoting its 'ACE VISA' program with the pledge to send applicants $100 if they fail to qualify for the program. The $300 personal finance educational program consists of five booklets and two videotapes produced by group called "American Credit Educators". The sub-prime card program is similar to a widely promoted offer made by marketers of CO-based Best Bank's 'VISA' card. Under the Best Bank program cardholders were given a $600 credit line in exchange for charging a $500 travel club membership. The VISA program lead to the collapse of Best Bank last year as losses soared. The 'ACE VISA' carries a 19.92% APR and a $25 annual fee for any additional cards.
