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March 5, 2024

For Immediate Release:

Superb Rule on Credit Card Late Fees Expected to Save Consumers $10 Billion Annually

WASHINGTON, D.C. – The Consumer Financial Protection Bureau today issued its final rule to address spiraling credit card late fees. The final rule announced today ushers in an $8 safe harbor cap on late fees charged to credit card customers and restricts annual Consumer Price Index increases of those fees. It marks a significant reduction of credit card late fee charges that currently range between $20 and $41.

“The $8 cap on allowed late fees not only relieves American families from burdensome charges, it also brings credit card practices back in line with the statutory requirements of longstanding federal laws,” said Ira Rheingold, executive director of the National Association of Consumer Advocates.

For years, the CFPB has conducted extensive research and analysis on credit card company practices and consumer behavior. In an October 2023 report to Congress, the bureau found that in 2022 late fees were the highest type of fees charged to cardholders and at the most frequent rate – amounting to more than $25 billion in fees. The bureau has also observed that an excessive late fee charge potentially affects a consumer’s ability to make future timely payments on the account.

“This rule is a huge boost for consumers, ensuring that the largest credit card issuers can no longer indiscriminately hike late fees and charge their customers an amount that is unreasonably disproportionate to the cost of doing business,” said Christine Hines, NACA’s senior policy director. “The Bureau has taken a huge step in tackling oppressive penalties in banking and credit card services.”