The credit card as you and I know it was launched in the early 60’s, since then it’s exploded in popularity. Credit card issuers soon faced a challenge – how do they make their businesses more profitable. That’s when they had the great idea of introducing fees. Soon fees became one of the leading sources of revenue, in some cases eclipsing the revenue earned from the interest rate charged.
HOWEVER, the world is changing, consumers are getting fed up with constantly being stung with fees: late payment fees, foreign exchange fees, cash withdrawal fees and overlimit fees to name a few. Some newer businesses have recognised this consumer demand – for example Monzo charge a flat rate for their overdraft and recently I’ve seen the 118 118 Credit Card is marketing their product to be no fees and no interest.
These types of products will challenge the bigger banks and put pressure on them to remove their fees and to make their products more consumer friendly.