July 07, 2009

Banking and credit-card consumers need to keep their guard up as financial institutions increasingly impose new fees and charges to balance their books in the wake of the continued economic downturn.Banks and card companies have gone on the offensive in advance of proposed new consumer financial-products protections that the Obama administration is asking Congress to enact. For many consumers, that could mean an unexpected sting on monthly bills.

The fee income is becoming increasingly more important as interest income is falling as a percent of total revenues," says Bob Hammer, CEO of R.K. Hammer, a bank-card advisory firm.Late fees, loan origination, over-the-limit and overdraft charges, for example, helped generate a hefty 53% of banking industry income in 2008, according to the Hammer firm. That's up from 35% of income in 1995.At $19 billion, credit-card penalty fees alone are nearly 80% more than what they were in 2003.