Re-inflating a national debt bubble is hitting some headwind. It seems really hard to get on board with a plan that counts on consumers taking out more loans and racking up credit card debt. WHAT AM I MISSING? Kipp
"Fees are another "mechanism" to combat rising defaults as the economy spirals downward, says Kevin Duignan, managing director at Fitch Ratings. "The unemployment outlook is dreary, there's been a tremendous loss of personal wealth, and the housing situation has forced many consumers to take a hit," he says.
At the end of 2008, 5.6% of credit card accounts were at least 30 days late, the highest since the Federal Reserve began tracking this data in 1991. Credit card charge-offs, at 6.3%, are at the highest since the first quarter of 2002. Charge-offs and delinquencies are likely to rise for at least another year, Fitch says.
This year, AmEx raised its late fees for some holders of its corporate charge cards, which have to be paid off each month. Borrowers 45 days late will be hit with a $39 fee, up from $29. For each month the balance remains delinquent after that, AmEx will charge $39, or 2.99% of the balance, whichever is higher.
At Wells Fargo, many consumers who withdraw cash from their credit cards inside a bank branch will now be charged $20 instead of $10, and the fee at the ATM will double to $10. Some late fees are also going up, says spokeswoman Lisa Westermann, as the bank seeks to "manage risk in this difficult credit environment."
In January, Chase imposed a $10-a-month fee on roughly 400,000 borrowers it says carried a large balance for more than two years and made little progress paying it off. Their minimum payments were raised to 5% of the balance from 2%."
