Study: Credit Card Late Fees Much Higher; 35% Assessed Late Fees

A report on 28 popular credit cards by the Government Accountability Office found that late fees averaged $34 in 2005, up from $13 in 1995, while some credit card issuers impose penalty interest rates of more than 30% on consumers who pay late or exceed the credit limit. The study found that holders of nearly half of all active credit card accounts paid little or no interest in 2005 because they generally paid their balances in full.
The six credit card issuers examined in the study, which together accounted for 80% of credit card lending in the country as of 2004, are Citigroup's Citibank, JP Morgan Chase's Chase Bank USA, Bank of America, MBNA America Bank, Capital One Financial and Morgan Stanley's Discover Financial Services. These issuers reported that 35% of their active U.S. accounts were assessed late fees and 13% were assessed over-limit fees in 2005.

Between 1980 and 2005, the amount that U.S. consumers charged to their cards grew from an estimated $69 billion per year to more than $1.8 trillion, with the number of U.S. credit cards issued to consumers now exceeding 691 million, according to data. The increased use of credit cards has contributed to an expansion in household debt, which grew from $59 billion in 1980 to roughly $830 billion by the end of 2005. The Federal Reserve estimates that in 2004, the average American household owed about $2,200 in credit card debt, up from about $1,000 in 1992.

According to, the number of times per month that credit or debit cards were used for purchases or other transactions exceeded 2.3 billion in May 2003, the last month for which the firm reported this data.

The study recommended that the Federal Reserve should revise rules on credit card disclosures to require that they more clearly emphasize penalty fees and rates and what triggers them.

 The GAO study was conducted from June 2005 to September 2006. The auditors also interviewed 112 consumers with credit card accounts. The report is available on the GAO Web site at

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