WASHINGTON, D.C. (March 5, 2024) |
The CFPB Tuesday issued its final rule to drastically reduce the safe harbor threshold credit card issuers can charge for late payments to $8. While the rule only applies to issuers that have over 1 million open accounts and the bureau claims the rule will have no impact on smaller issuers such as credit unions, America’s Credit Unions President/CEO Jim Nussle argues it will have negative implications on consumers and financial institutions.
- Credit card late fees are not “surprise” or “junk” fees – they are required by the CFPB to be clearly detailed upfront for consumers.
- By signing a credit card agreement, consumers know the costs if their payments are tardy.
- The CFPB’s own research shows that 74% of American pay their bills on time. There is no need to penalize those who follow the rules.
- The proposed rule will negatively impact the ability of credit unions to offer viable credit card programs, manage the risks associated with those programs, and increase the costs of credit cards for all cardholding members – not just those that incur late payment fees.
- The CFPB and the Administration have repeatedly classified a broad range of ordinary fees in the consumer financial services market as so-called “junk fees” obscuring the true cost of financial services.
- This government-wide effort to characterize all fees as “junk fees” appears to be a public relations tactic intended to divert the public’s attention away from the runaway inflation and other economic pressures impacting American’s budgets.
- America’s Credit Unions has received comments on this rule and many credit unions said their credit card programs targeted toward those with lower credit scores or thin credit profiles would be the first cut, tightening credit availability.