Similar to their U.S. neighbors across the pond, consumers in the United Kingdom also dislike credit card late and balance-transfer fees. In response, some UK issuers may start enabling cardholders to prepay their fees upfront, new research suggests.

New York-based management consulting firm Auriemma Consulting Group Ltd. conducted the research through an online survey of 500 British credit cardholders in April. The survey included questions regarding annual, balance-transfer, cash-advance, late, inactivity and additional-service fees.

Auriemma released the results of the U.S. version of the survey last week (see story).

Of the British respondents, 60% reported paying fees on their credit cards within the past year. Among those cardholders, 18% said they paid a late fee that averaged 34 British pounds (US$51 or 41 euros), 8% said they paid on average an annual fee of 91 pounds, and 10% said they paid a balance-transfer charge that averaged 314 pounds.

Among the respondents paying annual fees, 58% of respondents felt the annual fee was “moderate,” which may indicate most consumers not only are tolerant of annual fees, but they see the value in fee-based cards, Auriemma notes in the report. However, 68% said annual fees should be the first charge eliminated if issuers were to get rid of specific fees, followed by inactivity charges (60%) and account-initiation charges (57%).

Despite consumers’ protests to eliminate credit card fees, issuers are shifting away from no-fee credit cards because of changes in consumer behavior, Auriemma notes in the report.

No-fee cards, however, are not going to go away any time soon, Megan Bramlette, Auriemma managing associate, tells PaymentsSource. Many card companies may offer no-fee cards with a bare minimum of rewards or benefits, while the fee-based cards will offer richer reward packages, Bramlette says.

UK-based retailer Marks and Spencer PLC Marks offers consumers two versions of its rewards card, with the fee-based card offering better benefits, for example (see story).

Some issuers are considering offering consumers the opportunity to prepay activity-based charges, such as balance-transfer fees, cash-advance fees and foreign-exchange fees. Cardholders would pay a one-time charge that would cover a specified number of charges for 12 months. According to the survey, 45% of total respondents said they would like foreign-exchange fees included in the bundle along with cash-advance charges and annual fees.

The survey results suggest some consumers are willing to “prepay for behaviors they typically exhibit,” Bramlette says. “It resonates with consumers because if you give them a finite amount and a percentage rate, consumers will almost always choose the finite amount as the better value, even if it isn’t.”

Offering a prepackaged fee may be a challenge, however, Bramlette notes. “There are prepaid cards consumers can purchase when traveling internationally, so for credit card companies, bundling is a competitive move, but it also is a revenue stimulator,” she says.

And though a bundled upfront fee may offer consumers several benefits, only 12% of respondents reported they would be interested in prepaying their credit card fees. Auriemma defines this 12% as “the affluent segment,” which includes consumers who earn more than 50,000 pounds per year.

“Everyone is thinking outside of the box right now, which is good for the consumer because they are going to get new and better products that are more aligned with their preferences,” Bramlette says. “As long as the consumer feels like they are getting value for their money, everyone wins.”

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