A new rule announced Tuesday would cap credit card late fees at $8 as President Joe Biden continues to wage his war on junk fees.
The Consumer Financial Protection Bureau finalized a rule Tuesday to cut credit card late fees by closing a loophole used by large card issuers. The U.S. Chamber of Commerce and other business groups oppose the rule.
“For over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers,” CFPB Director Rohit Chopra said in a statement. “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.”
Such fees cost American families more than $14 billion a year, according to the CFPB. It estimates that American families will save more than $10 billion in late fees annually once the rule goes into effect by reducing the typical fee from $32 to $8. This will be an average savings of $220 per year for the more than 45 million people who are charged late fees, according to CFPB.
U.S. Chamber of Commerce Executive Vice President Neil Bradley said the Consumer Financial Protection Bureau credit card late fees rule will limit access to affordable consumer credit.
“Once again, the Consumer Financial Protection Bureau has exceeded its authority. The agency’s final credit card late fee rule punishes Americans who pay their credit card bills on time by forcing them to pay for those who don’t,” Bradley said. “This will result in fewer card offerings and limit access to affordable credit for many consumers.”
Bradley said the U.S. Chamber of Commerce plans to file a lawsuit to block the rule.
The CFPB’s final rule applies to credit card issuers with more than 1 million open accounts. These companies account for more than 95% of total outstanding credit card balances.
