Congress should support joint resolutions to void the CFPB’s credit card late fee final rule, America’s Credit Unions and other organizations wrote to members of Congress Tuesday. Sen. Tim Scott, R-S.C., and Rep. Andy Barr, R-Ky., introduced the resolutions Monday.
“By its own admission, the Bureau’s late fee rule will harm the 74% of consumers who pay their credit cards on time by forcing issuers to increase costs to offset delinquencies for those credit card users who pay late or not at all due to the significantly reduced late fee penalty. Even worse, the CFPB’s rule will create long-term harm for the minority of consumers it purports to help,” reads the joint letter sent to Scott and Barr. “By reducing the short-term cost of paying late for late payers, the CFPB may see a short-term political win– but it is introducing long-term financial risk to those same consumers in the form of higher principal and interest payments and damage to those consumers’ credit histories.”
The organizations added that the rule—by definition—would make it easier for consumers to miss credit card payments, raising the chances they become delinquent, which is reported to credit agencies.
“Ultimately, consumers experiencing delinquency will have this information reported to credit bureaus, leading to higher credit card balances carried month-to-month and lower credit scores, which can lead to far worse outcomes for consumers such as difficulty obtaining credit, or higher financing costs for housing, cars, and other necessary purchases,” they wrote.
America’s Credit Unions President/CEO Jim Nussle wrote Scott and Barr in support of the resolutions, noting the final rule “clearly demonstrates a misunderstanding on how credit cards work.”
