March 5, 2024 — Press Release

Advocates applaud rule lowering late fee default amount to $8, reflecting banks’ actual costs 

WASHINGTON – Advocates praised action taken by the Consumer Financial Protection Bureau (CFPB) to stop credit card lenders from raking in billions of dollars from excessive late fees. The CFPB’s final rule on credit card late fees would lower the default amount or “safe harbor” to $8, the amount the CFPB calculated that a late payment actually costs the lender.

“This rule will save consumers more than $10 billion, letting people keep their hard-earned dollars in their pockets instead of forfeiting them to huge corporations,” said Chi Chi Wu, senior attorney at the National Consumer Law Center. “The CFPB’s credit card late fee rule will help the balance sheets of millions of households stretched thin by record-high housing costs and other expenses.”

The CFPB’s final rule lowers the default amount from its previous high of $30 for the first late payment and $41 thereafter. Under the rule, if credit card companies charge more than $8, they’ll need to demonstrate that $8 does not adequately compensate them for their costs in dealing with late payments.

“The CFPB showed its math when it established an $8 safe harbor for credit card late fees,” said Lauren Saunders, associate director of the National Consumer Law Center. “That’s how good, data-driven regulation is done.”

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