Consumer Financial Protection Bureau caps credit card late fees at $8

Pinch News

The Consumer Financial Protection Bureau (CFPB) has finalized a rule aimed at reducing excessive credit card late fees by closing a loophole used by large card issuers. The rule will save American families over $10 billion annually by lowering the typical late fee from $32 to $8, benefiting more than 45 million people. This action comes after concerns that credit card companies were profiting from penalties and fees, despite the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) intended to curb such practices.

The CFPB’s rule lowers the immunity provision threshold for late fees to $8 and ends automatic inflation adjustments for larger card issuers with over 1 million open accounts. The rule also requires issuers to justify higher fees above the threshold based on actual collection costs. By addressing the problem of excessive late fees, the CFPB aims to promote fairer practices in the credit card market and provide consumers with greater financial protection.

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