Have you ever wondered how much money a credit card company 
makes? Have you ever wondered how much of that comes from late 
fees? Everyone has and if you haven’t you should because most 
likely you own a credit card, which means that these late fees 
has or could directly affect you.

As you have probably taken notice, credit card late fees are on 
the rise and have been so for awhile. There is enormous 
competitive pressure on credit-card interest rates and annual 
fees, and this has given way to a fee frenzy. For credit card 
issuers, late fees now represent their third largest revenue 
stream, (interest revenues and merchant fees rank first and 
second, respectively). In essence, those who pay late are now 
covering the costs for those credit card users who do not carry 
a revolving balance and those who file for bankruptcy.

So how much are credit card companies making from issuing late 
fees? Over the years we have watched the number of late fees 
charged to consumers jump to record-high levels. Late fees can 
range from $10 to as much as $40. The average late fee more than 
doubled since 1996 from $13.28 to $29.84. In fact, many major 
card issuers are now charging a $35 late fee. Let’s assume that 
100,000 people made late payments for a particular month and they 
were charged a late fee of $30 for doing so. This would add up to 
$3 million in revenue. As you can see, credit card companies are 
making a lot of money off of card holders and there is no slow 
down in sight regarding the increase in late fees.

Credit card companies are making a killing off the late fees they 
issue to their customers and they don’t mind doing it because 
their ultimate goal is to make money. They are like any other 
for-profit business in that they sell a product or service for 
revenue. In the case of credit card companies, the product 
happens to be credit. These companies aren’t just some “thing” 
sucking up as much money as they can. These “things” are run by 
man. And wherever man is involved, greed also becomes involved. 
These people are just like you and me. They may have a family to 
support, bills to pay, etc. Most people don’t work just for the 
pure enjoyment, but for money, a source of income. And the more 
income we achieve the easier and better our lives become, 
supposedly.

Some of you may be asking, “So what do we do about the late 
fees?”  Well there’s an article that I wrote awhile back 
that you may be interested in. You can find this article at 
http://www.nextmonthonline.com/WhitePapers/Article1.aspx .  
It addresses several methods and tips to avoid having to pay a 
late fee. One method in particular that I would like to address 
further in this article is the Skip-a-Payment technique. If you 
happen to know that you can’t pay your credit card bill for a 
particular month just skip it. Next Month Online is an 
independent company from credit card issuers. They allow their 
visitors to skip a payment for a nominal fee. This fee is 
generally 70% less than your typical late fee. You will accrue no 
late fee and no bad mark on your credit report. Credit unions 
often offer this type of service for loans or mortgages, but 
first you have to fill out an application and then you need to 
qualify. With Next Month Online, there is no application to fill 
out and everyone qualifies as long as they have a credit card. 
Credit card companies are not very happy with Next Month Online 
because they are losing money every time someone uses the Skip a 
Payment service. This is by far the best service you can use if 
you know you will be late because you save a lot of money and 
avoid all the hassles that come with bad credit.

Credit card companies are not backing down from increasing fees. 
They, for some reason, do not see us as people who make mistakes 
once in awhile or people with other priorities in our lives. They 
want their money and they want it now! This is the reason you 
should not back down either. Hit them where it hurts, their 
pocketbooks. If you know you will be late for a particular month, 
just use a skip a payment service because the credit card 
companies will no longer be taking money from you, you will be 
taking money from them. 

Daryl Flagg is the founder and CEO of Next Month Online. 
Next Month Online is a service that allows its visitors 
to skip credit card payments. They can be found at: 
http://www.NextMonthOnline.com. Sign up for free!