Your Credit Card Late Fee May Soon be Capped at $8
Consumer groups cheer proposal to limit late fees to “actual cost”
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.
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.
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