After that, fees pretty much exploded. Credit issuers charge more for fees and also have more products and services to charge fees on.

Bank accounts are also subject to more and more fees thanks to the deregulation of the 1980s. As banks can offer more services, there is more to charge for and less emphasis on the services customers used to expect, such as coin counting. Overall, banks noninterest income has increased, including a large portion that comes from fees.

Mergers between banks and credit issuers also marked the decade between 1996 and 2006. "There had been a number of monoline credit card companies but the big banks are now acquiring credit card companies," says Ed Mierzwinski, U.S. PIRG consumer program director. In June 2005, for example, Bank of America acquired MBNA, adding to the creation of a credit card empire or, as the Bank of America news release read, one of the largest credit card portfolios. "Consolidation has given banks a lot more power with everything under one roof. But you need regulators with a soul and a Congress with a spine, and we don't have either of those things right now," Mierzwinski says.

Future of credit card fees
2006: Help could be on the way. In September 2006, the U.S. Government Accountability Office released a report on credit card fees. The report was requested by Sen. Carl Levin, D-Mich., and decried fees charged by credit card companies and the opaque legal disclosures that enable their billing practices.

2007: In May, Levin and Sen. Claire McCaskill, D-Mo., introduced in the Senate a bill called the Stop Unfair Practices in Credit Cards Act, which would amend the Truth in Lending Act. The bill would limit some of credit industry's most egregious practices such as the application of penalty interest and charging debtors for paying their bills over the phone or Internet.

A similar bill -- the Credit Card Accountability Responsibility and Disclosure Act of 2007 or the Credit Card Act of 2007 -- was introduced in the House on March 9 by Reps. Mark Udall, D-Colo., and Emanuel Cleaver, D-Mo.

Could it spell the end of the era of unbridled fees?
Consumer advocates have taken a wait-and-see attitude. "It would almost be overly optimistic to think that the bills would pass in this form," says Linda Sherry, director of national priorities for Consumer Action. "But, both the Levin bill in the Senate and the Udall bill in the House do address the vast majority of the key points that need to be addressed right now to help get rid of the worst abuses in the credit card industry."

When legislators made noises early in the year, a couple of the big credit issuers moved proactively to change their ways. In January 2007, Chase moved from double-cycle billing to single-cycle in the interest of transparency. In a similar move, Citi did away with universal default clauses as well as the "any time for any reason" increases to rates and fees in March. "I don't think any consumer advocate trusts Citi at its word; only time will tell what happens," says Mierzwinski.

Robert Hammer, chairman and CEO of R.K. Hammer, a privately held bank card advisory firm, views the changes optimistically. "The good news is this: I think the industry is listening and paying attention. Perhaps in part due to the attention paid by the legislature; perhaps also the attention paid by consumers, who are smarter and read more. It's a combination of things that are happening that is creating a better environment for consumers." 

Sources

• FDIC Bank Trends, March 1998, "The Effect of Consumer Interest Rate Deregulation on Credit Card Volumes, Charge-Offs and the Personal Bankruptcy Rate" • FDIC General Counsel's Opinion No. 10; Interest charges under Section 28 of the Federal Deposit Insurance Act • FDIC General Counsel's Opinion No. 11; Interest charges by interstate state banks • FDIC Important Banking Legislation • FDIC: The S&L Crisis: A Chrono-Bibliography • FDIC: Advisory Opinions: Does Section 27 of the Federal Deposit Insurance Act pre-empt the Michigan Motor Vehicle Sales Finance Act? • Court TV Online: Legal Documents -- Supreme Court of the United States Syllabus Smiley v. Citibank (South Dakota), N.A. • Library of Congress Thomas Web site: Credit Card Act of 2007 (introduced in House) • Library of Congress Thomas Web site: Stop Unfair Practices in Credit Cards Act of 2007 (introduced in Senate)