CFPB Finalizes Credit Card Late Fee Rule

This morning, the Consumer Financial Protection Bureau (CFPB) finalized the Credit Card Late Fee rule. The ill-advised rule changes what is intended to be a punitive fee to a non-punitive fee. This will eliminate the desired effect and may inadvertently encourage cardholders to make late payments more frequently.

This view overlooks the significant challenges posed by unpaid balances. Financial institutions rely on timely payments to sustain their operations. Disincentivizing prompt payments will impact card issuers’ ability to manage their balance sheets effectively and could create liquidity challenges.

This rule is now final and will take effect early May 2024. The rule only applies to credit card issuers with over 1 million open credit card accounts. We expect legal challenges will be mounted by large credit card issuers.

Link to final rule: Credit Card Late Fee Rule

Posted in Advocacy on the Move, Regulatory Advocacy.