Higher Credit Card Fees Are Bad for Bank Business, Report Finds

May 9, 2012
Huffington Post 
credit card news

According to a new report from the Center for Responsible Lending (CRL), excessive credit card fees are unfavorable not only for consumers but also for bank business. The study found that credit card companies that marketed aggressively and practiced deceptive pricing suffered double the charge-offs during the Great Recession than companies than issuers that did not. "When consumers are duped and are taken by surprise by costs and fees, they are more likely to default," explained CRL senior researcher Joshua Frank. The report looked at nearly two dozen marketing and pricing practices at the top 100 card issuers between 2006 and 2010. The report undermines the argument often put forward by financial institutions that higher fees offset the risk of lending to those with questionable credit.
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