STATEMENT CFPB caps credit card late fees safe harbor at $8

The CFPB Tuesday issued its final rule to drastically reduce the safe harbor threshold credit card issuers can charge for late payments to $8. While the rule only applies to issuers that have over 1 million open accounts and the bureau claims the rule will have no impact on smaller issuers such as credit unions, America’s Credit Unions President/CEO Jim Nussle argues it will have negative implications on consumers and financial institutions.

“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.

“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.” – America’s Credit Unions President/CEO Jim Nussle


  • Credit card late fees are not “surprise” or “junk” fees – they are required by the CFPB to be clearly detailed upfront for consumers.
    • By signing a credit card agreement, consumers know the costs if their payments are tardy.
  • The CFPB’s own research shows that 74% of American pay their bills on time. There is no need to penalize those who follow the rules.
  • The proposed rule will negatively impact the ability of credit unions to offer viable credit card programs, manage the risks associated with those programs, and increase the costs of credit cards for all cardholding members – not just those that incur late payment fees.
  • The CFPB and the Administration have repeatedly classified a broad range of ordinary fees in the consumer financial services market as so-called “junk fees” obscuring the true cost of financial services.
    • This government-wide effort to characterize all fees as “junk fees” appears to be a public relations tactic intended to divert the public’s attention away from the runaway inflation and other economic pressures impacting American’s budgets.
  • America’s Credit Unions has received comments on this rule and many credit unions said their credit card programs targeted toward those with lower credit scores or thin credit profiles would be the first cut, tightening credit availability. 

Thursday, America’s Credit Unions Transition Board of Directors Secretary Karen Harbin (president/CEO of CommonWealth Credit Union) is set to testify on CFPB reforms and the impact of the bureau’s efforts on credit unions before the House Financial Services Subcommittee on Financial Institutions and Monetary Policy.

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