CFPB Finalizes Rule Cutting Credit Card Late Fees to $8
Earlier this week, the Consumer Financial Protection Bureau (CFPB) finalized a rule cutting credit card late fees from an average of $32 to $8, which the Bureau says will curb fees that cost American families more than $14 billion each year. The rule is part of the Biden Administration’s wider initiative against what it terms “junk fees”.
“For over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers,” said CFPB Director Rohit Chopra in a press release. “Today’s rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines.”
The final rule applies to the largest credit card issuers, or those with more than 1 million open accounts.
Shortly after the final rule was unveiled, industry groups and allies in Congress responded forcefully. As reported in American Banker, “the U.S. Chamber of Commerce said it will sue the bureau ‘imminently,’ bank trade groups denounced the rule, and Sen. Tim Scott threatened to fight the rule’s implementation.”
“This effort by the Biden Administration to use regulatory agencies to micromanage how private businesses set prices will have the same result: shortages, fewer choices for consumers, a weaker economy, and less jobs,” said Neil Bradley, Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy at the U.S. Chamber of Commerce. “To make matters worse, the strike force will be led by two agencies that, for the past three years, have been openly hostile to market efficiencies—blatantly ignoring lower prices and better outcomes for consumers.”
But Rep. Maxine Waters (D-Calif.), Ranking Member of the House Financial Services Committee, released a statement in support of the CFPB’s rule, calling it “yet another major action to protect consumers from billions of dollars in junk fees by finalizing this critical rule to slash credit card late fees.”
