Banking Industry Opposes New CFPB Rule on Credit Card Late Fees

On Tuesday, The Consumer Financial Protection Bureau (CFPB) finalized a new rule to cap all credit card late fees at $8, which will apply to the country’s largest credit card issuers, covering those with more than 1 million open accounts.

Banking and credit card companies have started reacting to a new Biden administration rule that puts an $8 ceiling on credit card late fees.

“Today’s flawed final rule will not only reduce competition and increase the cost of credit, but will also result in more late payments, higher debt, lower credit scores and reduced credit access for those who need it most,” American Bankers Association President and CEO Rob Nichols said.

Ranking Senator Tim Scott, R-S.C., announced plans in a media statement Tuesday morning to fight the new rule and its implementation.

“While lowering the cap on late penalties may sound like a good talking point, in practice it will decrease the availability of credit card products for those who need it most, raise rates for many borrowers who carry a balance but pay on time, and increase the likelihood of late payments across the board. Lawful and contractually agreed upon payment incentives promote financial discipline and responsibility,” Scott said in the press release.

“Ultimately, these commonsense practices protect consumers’ access to credit and enable a wider range of services,” the senator expanded. “To continue delivering for those who need it most, I will be using the Congressional Review Act process to fight the implementation of this rule.”