The CFPB released its final rule on credit card late fees Tuesday, reducing the “typical” fee to $8. The rule applies to card issuers with more than one million open accounts and will be effective 60 days after publication in the Federal Register.
“The CFPB’s misguided final rule on credit card late fees clearly demonstrates a misunderstanding on how credit cards work and potentially traps millions of consumers in a cycle of debt instead of fulfilling their intended purpose of protection. Credit unions work to empower their members’ financial decision making and clearly define their late fees. An $8 late fee, approximately the cost of a Big Mac and a large Coke, does nothing to protect the issuer and throws consumer accountability to the wayside,” said America’s Credit Union President/CEO Jim Nussle. “It’s laughable today’s rule is being released under the guise of increasing competition when its byproduct will be exactly the opposite. The bureau is racing toward a future with fewer choices, greater homogenization, and limited access for at-risk consumers. This rule is yet another death blow in the CFPB’s latest trend of dismantling real protections and stifling access to the competitive and safe services that credit unions provide.”
Specifically, the rule:
- Lowers the immunity provision dollar amount for late fees to $8;
- Eliminates the automatic annual inflation adjustment for the $8 late fee threshold; and
- Allows large card issuers to charge fees above the threshold if they can “prove the higher fee is necessary to cover their actual collection costs.”
America’s Credit Unions will continue to fight back against the CFPB’s misguided efforts that restrict access to safe, affordable credit and support efforts to hold the bureau accountable.
