해외자료 Payment windows shrinking(Credit card companies give consumers less time to pay bills)_ Cox News Service Sat, Jan. 08, 2005

[mumuki 남영민]

http://www.myrtlebeachonline.com/mld/myrtlebeachonline/business/10596526.htm

Posted on Sat, Jan. 08, 2005

Payment windows shrinking

Credit card companies give consumers less time to pay bills

Cox News Service

ATLANTA - You've sobered up from your shopping binges and New Year's Eve soirees. Now read the fine print on your post-holiday credit card bill.

You might not have as many days to pay it off as you used to.

For the past several years, card issuers gradually have been whittling away the grace period between when your bill is printed and when it's due.

The industry average, which was 30 days as recently as five years ago, is now closer to 20 days. And issuers have the right to trim even more. Federal law requires only a 14-day window from a bill's print date to its due date.

"Time is money. They shorten that grace period, and they get their money back a little quicker," said Greg McBride, an analyst at Bankrate.com. "When you're talking about billions of dollars, a few days' difference can be big for the issuers' bottom line."

But for card users, the quicker due dates can lead to multiple problems.

As issuers shrink grace periods, they also are getting more aggressive about penalizing late payers.

Plus, some issuers no longer use a fixed "due-by" date. Federal law allows them to vary payment dates by four days to account for leap years or due dates that fall on weekends.

Some issuers, including MBNA and Citibank, specify payments have to be received by a certain time - say, 1 p.m. Eastern Standard Time - on the due date.

Even calendar-conscious consumers easily could be caught off-guard. Just one slip-up could mean a late fee of up to $39 and penalty interest rates of up to 30 percent.

"At one time, issuers were reluctant to pull the trigger and assess the fee," said David Robertson, publisher of The Nilson Report, which tracks the card industry. "No longer. Card issuers have resorted to using penalty fees more liberally to raise revenue."

Fee income has become an increasingly important revenue stream for card companies because competition has eliminated most annual fees and forced issuers to market cards with zero-percent or low-rate interest.

What's more, fewer customers carry balances month to month. About 40 percent of cardholders pay their balances in full each month.

Last year, the credit card industry collected $14.8 billion in penalty fees, according to Robert Hammer, an industry consultant. That's up 26 percent from the $11.7 billion in penalty fees they collected in 2003.

Citibank and Chase Manhattan Bank, the nation's No. 1 and No. 2 issuers in terms of cards in circulation, each charge penalty interest rates of up to 29.24 percent for late payers.

Even on-time payment is no guarantee you won't be penalized, as Richard Smith of Acworth, Ga., learned in April.

He called Capital One MasterCard to alert the company that his payment would be late.

That was fine with Capital One, which left his interest rate unchanged, but the company recorded the late payment on his credit report.

"They didn't up my interest rate, but my Discover card raised the interest rate when they saw the late payment on the other card," the retired Air Force veteran said.

He now pays about 19 percent interest on his Discover card, up from 13 percent. That policy, known as universal default, is a standard clause for most of the large issuers.

Brenda Hill, a Discover spokeswoman, said the company doesn't comment on individual customers. "But our accounts are periodically reviewed for default risk."

Fayetteville, Ga., residents Robert and Sue Bozgoz say they now pay most bills online after American Express raised its interest rate to 26 percent from 14 percent after they paid late.

Robert Bozgoz said he now reads every line of his credit card statements carefully and pays as he receives them.

"As they come in, I use online bill pay," he said. "I want to make sure that I don't get hit with the late fees."

Card companies say it's online users such as the Bozgozes who make it OK to speed up due dates.

The American Bankers Association, the industry's chief lobbying group, says although grace periods are shorter, consumer payment options have grown.

"The amount of time it takes to pay a bill has also gone down," says Tracey Mills, an ABA spokeswoman. "Now that consumers have increased options such as online bill payment and telephone banking, you don't have to use snail mail to pay your bill anymore, and that counterbalances a shorter grace period."

MBNA, for example, allows customers to set up payment dates up to a year in advance. For customers who mail in payments, MBNA posts them the day they arrive - weekdays or weekends - spokesman Jim Donahue said.

But even with new bill-paying options, consumer advocates say a wave of bank consolidations has left card users with fewer choices.

Indeed, the top 10 card issuers have more than 80 percent of the roughly 634 million credit cards in circulation, according to Cardweb.com. In 1990, they controlled about 56 percent.