Thursday, December 21, 2006
Credit Card Overdue Fees worth £500 in the UK
The Banking Business Review has an interesting piece on the approaching problem of credit management in the retail sector. Noting that the card sector, overdrafts and mortgages have become the latest products to be scrutinized by regulators with respect to excessive fees, the regulators are clamping down on excessive fees which will undoubtedly be a huge issue for retail lenders. "Indeed, they are likely to lose a significant source of revenue. For instance, over limit and late payment fees accounted for an estimated 11.5% of total credit card industry revenues in 2005. Furthermore, the enforced reduction in default fees will cost the credit card industry an estimated GBP524 million in lost revenue". Given that these companies may no longer financially benefit from letting customers run up these fees, it is probably going to become even more important that outstanding credit is collected efficiently.