Banking & Payments DECODED
Previous edition: 13 May 2024
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US credit card late fees: round 1 to the US Chamber of Commerce
A Trump-appointed judge has blocked CFPB plans to prohibit credit card companies from charging customers late fees higher than $8.
US District Judge Mark Pittman has granted a preliminary injunction to card issuers and banking organisations. These organisations are led by the US Chamber of Commerce. It alleges that the CFPB plans to restrict credit card late fees to $8 violates several federal statutes.
CFPB estimates an average saving of $220 per year for over 45 million consumers charge late fees
The CFPB rule change was due to take effect on 14 May. The CFPB says cutting late fees from the current average $32 to $8 would save consumers about $10bn per year.
US Chamber of Commerce Litigation Center Counsel Maria Monaghan said: “This ruling is a major win for responsible consumers who pay their credit card bills on time and businesses that want to provide affordable credit. The CFPB’s attempted micromanagement would have raised costs for most credit card users. And made it harder for businesses to meet consumers’ needs. The US Chamber will continue to hold the CFPB accountable in court."
The CFPB’s move on late fees is just one element of a comprehensive CFPB attack on so called ‘junk fees’. The $8 cap would apply to large credit card issuers. The definition would apply to those credit card issuers with more than 1 million accounts. The CFPB estimates that such issuers constitute around 95% of total outstanding credit card debt.
The injunction represents merely a temporary win for card issuers. A full hearing will be scheduled when the case will be argued in more detail.
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