A War on Junk Fees
And potential wins for consumers
Imagine a world where the maximum charge for a late credit card payment was $8?
Now, imagine the same world but also with a maximum bank account overdraft fee of $14?
What type of consumer-friendly utopia is this?
It could happen in America if those crazy dreamers at the Consumer Financial Protection Bureau (CFPB) get their way.
Early last year, the CFPB proposed limiting credit card late fees to $8 per month.
While that was met with resistance from banking interests, it’s still possible the CFPB will see this to fruition.
CFPB research suggests consumers pay more than $12 billion a year in credit card late fees alone.
“Over a decade ago, Congress banned excessive credit card late fees, but companies have exploited a regulatory loophole that has allowed them to escape scrutiny for charging an otherwise illegal junk fee,” said CFPB Director Rohit Chopra.
Now, as the Biden Administration continues its focus on eliminating costly junk fees, the CFPB has its sights set on overdraft fees. A recent proposal would limit the maximum overdraft fee to $14. The current typical fee is $35.
The CFPB notes that lowering the maximum allowable overdraft fee could save consumers $3.5 billion a year. In announcing the rule, the CFPB presented data indicating that the average transaction that triggers an overdraft is for $26 and that overdrafts are typically repaid in three days or less.
While banks aren’t exactly thrilled with these proposals, the CFPB says the proposed maximum fees will allow banks to recoup the actual costs of processing overdrafts or late payments without padding profits.
Chopra has long advocated that banks focus on improving profits by improving service rather than by adding unnecessary fees.
Isn't this a little, and a little too late? Again, this doesn't make the president seem empathetic to whom it effects due to the fact that these issues we're to be corrected by the subsequent matter. Beside that, it's what is done not what was said.
Although a commendable thought, the facts speak for themselvesmuch like Mr. Biden's 53 year track record.