Credit card holders will soon see significantly lower late fees due to new rules from the Biden administration.
of Consumer Financial Protection Bureau On Tuesday, it finalized rules that would reduce late fees charged by credit card companies from an average of $32 to a maximum of $8.
The CFPB says the change will save cardholders about $14 billion a year, and an average of $220 a year for the more than 45 million people who are charged late fees.
“For more than a decade, the credit card giants have exploited loopholes to collect billions of dollars in junk fees from American consumers,” CFPB Director Rohit Chopra said in a statement. “This rule puts an end to the days when major credit card companies hide behind the excuse of inflation when they increase their own profits by raising fees for borrowers.”
The CFPB said the rule does not affect credit card issuers’ ability to raise interest rates, lower credit limits or take other actions with late fees. However, what is opposed to this is industry organizations, etc. He said the change essentially penalizes people who pay their bills on time.
“Once again, the Consumer Financial Protection Bureau has exceeded its authority. The agency’s final credit card late fee rules will penalize Americans who don’t pay their credit card bills on time by forcing them to do so.” .” Neil Bradley, executive vice president, chief policy officer and strategic advocacy officer at the U.S. Chamber of Commerce, said in a statement.
“This will result in fewer cards being offered and limit access to affordable credit for many consumers. The Chamber is committed to stopping enforcement of this misguided and harmful rule. “We plan to immediately file a lawsuit against the agency,” he added.
The new rules apply to all credit card issuers with more than 1 million accounts, representing more than 95% of all credit card balances. the current, Bank may charge $25 for first late payment Subsequent late payments will cost $35, and these amounts can be adjusted annually for inflation. Under the new rules, the maximum fee for each incident will be $8 and will not automatically change annually for inflation.
Additionally, if your card issuer wants to charge you more, you will need to prove that the higher fee is necessary to cover the actual collection costs.
The rule will go into effect in approximately 60 days.
