Groundwork’s Bilal Baydoun Celebrates Finalized CFPB Rule on Credit Card Late Fees

Groundwork’s Bilal Baydoun Celebrates Finalized CFPB Rule on Credit Card Late Fees

Finalized rule to save consumers more than $10 billion

Today, the Consumer Financial Protection Bureau finalized a rule that prevents credit card companies from charging late fees higher than $8, which will save 45 million people an average of $220 or more than $10 billion a year. Groundwork Collaborative’s Director of Policy and Research Bilal Baydoun reacted with the following statement:

“Junk fees, like the excessive late fees credit card companies charge, are yet another tactic corporations use to prey on customers and juice their profit margins even further. CFPB’s new rule demonstrates that policymakers can – and must – take on predatory, deceptive behavior and act as a strong check on corporate power.”

Email press@groundworkcollaborative.org to speak with one of Groundwork’s experts about today’s CFPB rule and the impact of junk fees and profiteering. 

Background

• The new rule will cap late fees at $8 unless companies can “show their math” and demonstrate that a higher fee is needed to cover their collection costs. It also ends the annual inflation adjustment for companies with over 1 million accounts. This adjustment allowed companies to hike fees with inflation, even if their own costs didn’t rise.
• Before today’s rule, credit card companies charged as much as $41 in fees for a late payment with the average fee around $32. The CFPB estimates that the income generated from late fees is approximately five times greater than the costs companies incur for late payment violations.