Will Credit Card Late Fees be Capped at $8?
Consumers could soon see relief from this junk fee
Credit card late fees are annoying but often viewed as a necessary element of having a credit card.
Miss the payment by a day — or even a few hours — and you could be hit with fees up to $41.
The Consumer Financial Protection Bureau (CFPB) says that’s excessive.
The regulator is seeking to cap credit card late fees at a rate that allows banks and credit card companies to recoup their actual cost but doesn’t overly tax delinquent consumers.
That rate? $8.
That’s it.
Your new maximum late fee for a credit card payment could be capped at $8.
Not surprisingly, consumer groups are expressing support for this measure. I’m betting credit card owners are also happy to see this may soon happen.
“We strongly support the proposed safe harbor of $8 for credit card late fees and thank the CFPB for proposing it,” said Chi Chi Wu, senior attorney at the National Consumer Law Center. “Unlike the previous safe harbor amounts of $30 and $41, $8 is a fair amount that is reasonable and proportional to the costs incurred by credit card companies for late payments.”
Companies currently charge people as much as $41 for each missed payment, and these fees result in billions of dollars in annual junk fee revenue for credit card companies. In fact, the CFPB notes that American families pay $12 billion a year in credit card late fees. The new proposal would reduce late fee payments by about $9 billion a year.
Expect banking and financial interest groups to oppose this effort — but the Biden Administration seems to be taking a hard line on junk fees. This means you could soon see a much lower credit card late fee.
A "necessary element" is entirely dependent upon one's perspective and I am confident that you will heartily agree that for us consumers it is actually an unwanted element; whereas for corporate greed industries it is an unnecessary but altogether desirable element; it is also an essential element in the more or less little discussed reality of the fact that a super-majority of financial services, in much the same way as rental property businesses, are modeled on the fact that it is not the actual costs of any one financial product or rental service that drives and sustains corporate profiteering, no, ultimately it is the artificially created system of continuous consumer debt that produces the desired bottom line for proponents of greed.
On a separate matter I just posted a note with a question for you.