FEBRUARY 2004

Bank Card Revenue Breakdown

Data released by R.K. Hammer Investment Bankers provide a recent snapshot of credit card financials. Based on 75 million credit card accounts sold in 2003 for prime card issuers (excludes subprime accounts), interest income amounted to 65% and fee income comprised 35% of all revenue. Breaking down the fee income component, 50% was derived from interchange, 27% from penalty fees, 13% from cash advance fees, and 8% from annual fees. On the expense side, chargeoffs represented 43% of all expenses, while 38% of total expenses were operating expenses and 19% was attributable to the cost of funds.