Rule capping credit card late fees at $8 is staying in place – here’s what it means for you
Rohit Chopra, director of the Consumer Financial Protection Bureau, speaks during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington, DC, December 15, 2022.
Dinh Than | Bloomberg | beautiful images
The US banking industry won an important victory in the war try intended to prevent the execution of a Consumer Financial Protection Bureau The regulation will significantly limit the fees that credit card companies can charge for late payments.
A federal court late Friday approved The industry’s last-minute legal effort to halt implementation of a regulation has been announced in March and takes effect Tuesday.
In his orderJudge Mark Pittman of the Northern District of Texas sided with plaintiffs including the U.S. Chamber of Commerce in the CFPB lawsuit, saying they had cleared the hurdles in arguing for a preliminary injunction to freeze the rule.
This result, at least for now, still maintains an important source of revenue for the US card industry. The CFPB estimates that this rule will save American families 10 billion USD a year of fees paid by those who are late paying their bills. It would limit late fees that are typically $32 per incident to $8 per incident and limit the industry’s ability to increase fees.
It is unclear when or if the new regulations will take effect.
“Consumers will be on the hook for $800 million in late fees each month if the rule is delayed — money that increases card issuers’ profit margins,” a CFPB spokesperson told CNBC on Friday. greatest credit”.
The spokesperson said the industry’s lawsuit is an attempt to block a regulation “aimed at continuing to rake in tens of billions of dollars in profits by charging borrowers late fees that far exceed their actual costs.” “.
CFPB does speak The industry profits from borrowers with low credit scores by charging ever higher late fees in the past decade, while trade groups argue that capping fees is a misguided effort. redistribute costs for those who pay their bills on time.
Consumer Banking Association, one of the organizations sued The CFPB said it was “pleased with the District Court’s decision to issue a preliminary injunction blocking the CFPB’s credit card late fee rule from taking effect next week.”
CBA said it will continue to file its case with the court on why the CFPB rule should be “completely repealed.”
