Late fees on credit cards could be capped at $8 if a plan from the Consumer Financial Protection Bureau moves forward.
published Wednesday, late fees would be capped at $8. Credit card companies could charge more if they could prove that it was necessary to cover the costs of collecting the late payment, but the bureau said it had preliminarily found that the revenue generated by late fees was five times higher than related collection costs.
The proposal would also end the automatic inflation adjustment and cap late fees at 25% of the required minimum payment rather than the 100% that's currently permitted. Last year, a CFPB report on credit card late fees found that most of the top credit card issuers were allowed by regulation, and cardholders in low-income and majority-Black areas were disproportionately impacted by the charges.Financial institutions have been pushing back on changes to late fee rules since the CFPB signaled its intention to rein them in last year. They responded to Wednesday's proposal with similar opposition.that the proposal would result in customers having less access to credit.
"If the proposal is enacted, credit card issuers will be forced to adjust to the new risks by reducing credit lines, tightening standards for new accounts and raising APRs for all consumers, including the millions who pay on time," Nichols said.. Nussle said it would"reduce access to safe and affordable open-end credit," and he slammed the CFPB for not getting more input from small financial institutions.
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