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Will Credit Card Late Fees Become a Thing of the Past?
CFPB Director hints at action to limit late fees, boost competition
In testimony to Congress, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra told lawmakers he’s asked his agency to explore ways to limit credit card fees and boost competition in the financial services industry.
Chopra’s remarks noted that competition in the marketplace means better service for consumers and said the status quo carries risks for consumers.
Competition leads to innovation, attractive rates, quality service, and benefits that may be difficult to quantify. But when consumers do not get to select their provider or when switching is complex or difficult, it can lead to stagnation, junk fees, and poor treatment. Indeed, in many markets for consumer financial products and services, like loan servicing and credit reporting, consumers have no choice of provider.
A Reuters report added that in response to questioning, Chopra specifically called out the credit card industry for their reliance on late fees.
“We want to make sure … that credit cards are a competitive market that people can use to find lower rates,” Chopra said in response to questioning about the CARD Act — a law passed in 2009 to curb abuse in the…
