{"id":1798,"date":"2024-03-06T00:03:50","date_gmt":"2024-03-06T00:03:50","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/03\/06\/business-groups-hit-back-at-efforts-to-cap-credit-card-late-fees\/"},"modified":"2024-03-06T00:03:50","modified_gmt":"2024-03-06T00:03:50","slug":"business-groups-hit-back-at-efforts-to-cap-credit-card-late-fees","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/03\/06\/business-groups-hit-back-at-efforts-to-cap-credit-card-late-fees\/","title":{"rendered":"Business groups hit back at efforts to cap credit card late fees"},"content":{"rendered":"
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The Biden administration is seeking to impose a new limit on the typical credit card late fee, but the consumer credit and banking industry warns the change could ultimately affect other consumers in the form of higher interest rates.<\/p>\n

The Consumer Financial Protection Bureau said in a release Tuesday that a proposed $8 cap for a typical late fee would help save consumers a cumulative $10 billion.<\/p>\n

<\/div>\n

\u201cFor over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers,\u201d CFPB Director Rohit Chopra said. \u201cToday\u2019s rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines.<\/p>\n

President Joe Biden has made targeting \u2018junk\u2019 fees a major focus of his administration. Earlier Tuesday, he announced the formation of a task force targeting unfair and illegal pricing schemes.<\/p>\n

But the credit card industry and other financial associations are already hitting out at the CFPB\u2019s proposed new rule, saying it could lead to unintended consequences for consumers. <\/p>\n

In a statement, Rob Nichols, the president and CEO of the American Bankers Association, called the proposal \u2018flawed,\u2019 arguing it could actually result in more late payments and ultimately lower credit scores. It could also have a knock-on effect for card users who do pay what they owe on time, Nichols said.<\/p>\n

\u2018The Bureau\u2019s misguided decision to cap credit card late fees at a level far below banks\u2019 actual costs will force card issuers to reduce credit lines, tighten standards for new accounts and raise APRs for all consumers \u2014 even those who pay on time,\u2019 Nichols said. <\/p>\n

The Consumer Bankers Association, another trade group, echoed those concerns. <\/p>\n

\u201cThe rule\u2019s policy goals are, at best, consumer redistribution, not consumer protection,\u201d the organization\u2019s president and chief executive, Lindsey Johnson, said in a statement.<\/p>\n

Later Tuesday afternoon, the U.S. Chamber of Commerce announced it was suing over the proposal.<\/p>\n

\u201cOnce again, the Consumer Financial Protection Bureau has exceeded its authority,\u2019 the business group said in a statement. \u2018The agency\u2019s final\u00a0credit\u00a0card\u00a0late fee rule punishes Americans who pay their\u00a0credit\u00a0card\u00a0bills on time by forcing them to pay for those who don\u2019t. This will result in fewer\u00a0card\u00a0offerings and limit access to affordable\u00a0credit\u00a0for many consumers.\u2019<\/p>\n

The proposed rule would apply only to large credit card companies. Currently, credit card companies can charge as much as $30 for a first late payment under a law enacted in the wake of the 2008-09 financial crisis. <\/p>\n

The CFPB said it had reviewed market data to arrive at the $8 late fee it is proposing. As part of the new rule, the CFPB would nevertheless allow banks to charge higher late fees under a \u2018show your work\u2019 provision.<\/p>\n

Nichols of the bankers\u2019 association said that the $8 level is \u2018far below\u2019 banks\u2019 actual cost of managing late fees and that the association is likely to challenge it. <\/p>\n

\u2018We will closely review this final rule and consider all options to fight the harmful consumer policy coming out of Director Chopra\u2019s CFPB,\u2019 Nichols said, adding: \u2018This rule should not be allowed to go into effect.\u201d<\/p>\n<\/p>\n

This post appeared first on NBC NEWS<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Biden administration is seeking to impose a new limit on the typical credit card late fee, but the consumer credit and banking industry warns the change could ultimately affect other consumers in the form of higher interest rates. The Consumer Financial Protection Bureau said in a release Tuesday that a proposed $8 cap for […]<\/p>\n","protected":false},"author":0,"featured_media":1799,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1798","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/1798","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=1798"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/1798\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/1799"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=1798"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=1798"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=1798"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}