Could credit card late fees go down?
WASHINGTON (NEXSTAR) – The Biden administration announced a new rule that could slash credit card late fees.
“Those fees are way more than it costs to actually process and collect,” Consumer Financial Protection Bureau Director Rohit Chopra said.
The rule would cut the average late fee from $32 to $8. The administration says big banks have slowly increased late fees over the past decade.
“Hauling in over fourteen billion dollars,” Chopra said.
Chopra estimates more than 45 million Americans each year pay credit card late fees.
“Overwhelmingly paid by those who are living paycheck to paycheck or barely getting by,” Chopra said.
Chopra says the rule could save the average late payer $220 a year but some industry experts criticized the rule, saying it doesn’t really protect consumers.
“Paying late has long-term damage to your credit and when you go to purchase a house, when you go to purchase a car, your financing costs are going to go up,” Consumer Bankers Association President Lindsey Johnson said.
Johnson fears this rule change could encourage late payments.
“We could see consumers becoming more in debt, having long-term impacts, having a harder time paying those bills off at the end of every single month,” Johnson said.
Sen. Tim Scott (R-S.C.) agrees and promises to try and overturn the rule in Congress.
Credit card users could expect to see this change go into effect in a few months.
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