How Much do Consumers Pay in Credit Card Late Fees?
Consumer Bureau report says card issuers charged $12 billion in late fees in 2020
Credit cards can be a convenient way to manage expenses and can be a useful tool for consumers if they are managed well. However, there are pitfalls to the ubiquitous products.
Besides the high interest rates you pay if you only pay the minimum payment each month, there’s also the risk of late fees.
The Consumer Financial Protection Bureau (CFPB) issued a report showing that card issuers charged $12 billion in late fees in 2020.
The CFPB’s leadership has suggested that card issuers should be working to compete on services offered rather than earning money by profiting from punitive fees.
“Many credit card issuers have made late fee penalties a core part of their profit model. Markets work best when companies compete on price and service, rather than relying on back-end fees that obscure the true cost.” said CFPB Director Rohit Chopra. “Given their current practices, we expect that credit card issuers will hike fees, based on inflation, as limits continue to rise.”
The CFPB report notes that the maximum allowable late fee penalty is $30 for the first late payment and $41 for subsequent late…
