INDUSTRY NEWS     Fees put squeeze on credit cards By Tom Ramstack THE WASHINGTON TIMES July 4, 2005 Credit card issuers are finding new ways to make money off their customers as they raise their monthly minimum payments.   U.S. Bank and JPMorgan Chase, for example, both boosted credit card late fees from $35 to $39 recently.  "Desire for growth in fee income and overall profitability is driving the increase in punitive rates and ... for late and over-limit fees," said Greg McBride, senior financial analyst for Bankrate.com, an online banking-industry information service.      Citibank, Bank of America and MBNA, which Bank of America said last week it would purchase, already announced they are increasing minimum monthly payments. The minimum payments typically amount to about 2 percent of a credit card balance, but are likely to rise to about 4 percent.      The increases mean that while the companies will get more income monthly from their customers, they will not make as much off the interest from account balances.   Major credit card issuers such as Bank of America, Citibank, MBNA, American Express and Chase also have increased interest rates on credit card debt by two percentage points since last year as banks raise the prime lending rate by the same amount.   The most recent increase took place last week, when most credit card companies raised their interest rates by one-quarter of 1 percent after the Federal Reserve raised rates Thursday. Credit card holders are paying an average of 13 percent interest on their credit debt with a 24-day grace period for repayment without penalty, according to BankRate.com, an online banking-industry information service.      But credit rates do not always move in lockstep with the prime lending rate set by banks after the Fed raises its federal funds rate. The prime rate fell by 4.5 percentage points from 8.75 percent in February 2000 to 4.25 percent in November 2002. Meanwhile, average credit card interest rates fell by 1.52 percent during the same period, from 14.3 percent to 12.78 percent, Travis Plunkett, legislative director for the Consumer Federation of America, told the Senate Banking, Housing and Urban Affairs Committee last month. "For years, credit card issuing companies have been very stingy about passing on their savings," Mr. Plunkett said.  Household credit card debt has more than tripled, from an average of $2,966 in 1990 to $9,312 in 2004, according to CardWeb, a credit card information service.    Nationwide, consumers have amassed a record $796 billion in credit card debt.  Interest and late-fee rates can vary with the credit history of each consumer. Some interest rates are as high as 20 percent.  Capital One, one of the nation's largest credit card issuers, makes its credit card rates "individually targeted," said spokeswoman Diana Don.   Consumer groups call individualized rates "repricing" and say it has become profitable for the credit card industry. The industry "has become technologically more adept at repricing," Mr. Plunkett said. "That involves refitting interest rates because of a problem or a purported problem with the customer."  Consumer complaints are compelling the Federal Reserve Board and Congress to consider revising credit card industry regulations. The new Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires credit card companies to print a warning on monthly statements to notify consumers how long they will be in debt if they make only minimum payments. The federal government also is pressuring credit card companies to raise monthly minimum payments so consumers will pay off their balances more quickly, rather than getting caught in a cycle of recurring debt. In another proposed change, credit card companies would be required to make their written disclosures about terms of their credit easier to understand. The Fed also is reviewing its policies to protect consumers against unfair card practices and inaccurate billing.  Unfair practices can include significant changes in interest rates without explanations or a lack of recourse when consumers have complaints.   About 55 percent of consumers pay off their credit card debt each month without incurring any interest charges, according to the American Bankers Association.     More details below.