Credit card issuers are reportedly raising interest rates on cards or adding new fees to make up for lost revenue due to late fee caps.
As a result of these developments, average interest rates on credit cards have reached levels close to the highest in the world. federal reserve system Data dating back to 1994, Wall Street Journal (WSJ) reported Monday (October 7th).
of Consumer Financial Protection Bureau The CFPB's rule capping late fees at $8 was finalized by the regulator earlier this year, but was challenged in a lawsuit brought by banks and business groups, and a Texas judge in May ruled that the CFPB's rule capping late fees at $8 was The law was reportedly suspended before it went into effect.
The rule is still tied up in court, the report said.
Still, card issuers and banks are looking to offset potential losses caused by the rule, the report said.
for example, capital one CEO Richard Fairbank The bank said in April it was implementing unspecified “mitigating measures.” bread finance It said it would remove the “soft cap” on fees and also charge additional fees. and synchrony The company increased interest rates on one of its store cards and introduced a $1.99 fee per paper statement on some card programs, according to the report.
of American Bankers Association The increase in interest rates charged by card issuers in recent years reflects the increase in the number of subprime borrowers they have served since the 2008 financial crisis, according to the report.
The report said third-quarter bank earnings will provide new data on card balances and delinquencies.
When announcing rules to lower credit card late fees in March, the CFPB said the change would reduce regular fees. Late fee The fees charged by card issuers range from an average of $32 to (in most cases) $8.
“Today, the credit card industry generates more than $14 billion in late fee revenue each year, which, according to our research, is more than five times the associated costs for businesses,” said the CFPB director. Rohit Chopra Said.
If you try with lawsuitthe rule went through several “jurisdictional ping-pongs” until a federal judge in Texas sent the case back to Washington, D.C., PYMNTS reported in May.
