- 26% of credit card users paid activity based fees (such as balance transfer and cash advance fees) in the last 12 months – consumers now view these fees as the cost of ‘doing business’.
- 50% of credit card users indicated that they would be willing to pre-pay fees for additional services like insurances, access to special events, and concierge services. Affluent consumers (defined as having a household income exceeding £50,000) were more than twice as likely as non-affluent consumers to be interested in pre-paying fees.
- 12% of credit card users would be extremely interested in pre-paying for a service package where they would pay a single annual charge to avoid paying activity-based fees like foreign exchange and cash advance fees.
- Consumers are not at all willing to accept upfront charges for behaviours they either consider to be part of standard service (e.g. account opening fees), or that are incurred as a result of failure to use the card (e.g. inactivity fees).
- Annual (and monthly) fees will remain unpopular unless there are additional benefits offered. Many issuers have recently introduced enhanced, fee-based rewards products to the market that have been well-received to date.
Matt Simester, Managing Director of ACG’s London office, comments that, “consumers are more accepting of fees that they perceive to be fair and reasonable like balance transfer fees, which interesting have really only been common over the last few years. However, fees that appear to simply be revenue generators, like inactivity fees, remain highly unpopular.”
Simester goes on to say, “Card issuers are expected to continue to develop new card offerings with tiered rewards and benefits, offering customers the opportunity to pay a higher annual fee for additional benefits. I do not expect ‘no-fee’ cards to disappear from the market. The difference in the perceived value of cards with and without annual fees will continue to grow, with no-fee cards eventually offering just the most basic features and functionality.”
