Bankers Fear CFPB Will Lower Cap on Credit Card Late Fees

Source: American Banker

The Consumer Financial Protection Bureau is expected to seek to lower the cap on credit card late charges to safeguard cardholders from excessive fees imposed by issuers and from the effects of inflation.

Such a move would dovetail with CFPB Director Rohit Chopra's pledge to crack down on what he calls “junk fees,” or charges that he says don't correlate with the underlying costs of products or services.

Last month Chopra criticized credit card issuers for collecting $12 billion of late fees in 2020. In supporting a reduction in late fees, the CFPB cited the need to improve competition and reduce costs for subprime borrowers that pay a disproportionate share of penalties.

Bankers now expect the CFPB to reset the maximum allowable amounts for late fees, which could drop a few dollars from the current limits of $30 for first-time late fees and $41 for recurring fees.