White House Will Put A Limit On Late Fees For Credit Cards

In a move that could save Americans $9 billion a year, the Biden administration is going after credit card late payment fees.

The proposal from the Consumer Financial Protection Bureau (CFPB) would limit late fees to $8. This is much less than the average of around $30 that is charged now.

Even if someone pays a few hours after the deadline, the watchdog says, they could be charged a huge late fee that is much higher than the credit card company’s collection costs.

The proposed rule would also stop the automatic annual adjustment for inflation and ban late fees that are more than 25% of the amount the consumer needs to pay.

CFPB director Rohit Chopra says:

“Over a decade ago, Congress banned excessive credit card late fees, but companies have exploited a regulatory loophole that has allowed them to escape scrutiny for charging an otherwise illegal junk fee.

“Today’s proposed rule seeks to save families billions of dollars and ensure the credit card market is fair and competitive.”

The plan will go into effect next year after a time for people to say what they think about it.