Banks Threaten to Sue to Preserve Power to Charge Excessive Late Fees
Junk fees represent a multibillion-dollar profit center for banking industry
Consumers are on the verge of a huge win against the powerful banking industry as the Consumer Financial Protection Bureau (CFPB) has announced a new rule that would cap credit card late fees at $8.
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.
Not surprisingly, banking interests oppose this new fee cap.
American Banker reports:
With billions of dollars at stake, trade groups representing large issuers are threatening to sue the CFPB, once the rule is finalized, for failing to convene a small-business review panel as required by law. Hundreds of small community banks and credit unions claim they will suffer economic harm if the plan goes into effect.
The banking industry says that post-collection costs exceed the $3 billion in revenue they’d collect with an $8 cap.
