Credit card issuers lament potential loss of billions of dollars in late fee revenue
On the heels of an announcement by the Consumer Financial Protection Bureau (CFPB) that the federal regulator is planning to limit credit card late fees to a maximum of $8 per instance, advocacy groups representing banking interests panned the move and said it would harm consumers in the credit market.
Paige Pidano Paridon, Senior Vice President of the Bank Policy Institute, said of the move:
"Today’s CFPB proposal to artificially cap credit card late fees at $8 is based on deficient analyses and ignores a bipartisan Congressional mandate that these fees should incentivize customers to pay their bills on time. By effectively removing those incentives, the proposal would harm the very consumers the CFPB seeks to protect by increasing the overall cost, and reducing the availability, of credit."
Likewise, the Consumer Bankers Association (CBA) said the move threatens to limit access to credit. Ostensibly, these card issuers would be less likely to issue cards if they are unable to rely on the $12 billion a year available in late fees. Under the CFPB proposal, card issuers would lose roughly $9 billion a year in late fees as the cap on such fees would move from the current rate of $41 to $8.
"Millions of Americans rely on credit cards to make everyday purchases and cover emergency expenses," said Lindsey Johnson, President and CEO of the CBA. "It is deeply unfortunate and puzzling that policymakers would take action that could ultimately limit consumers’ access to these valued financial products at a time when they are needed most."
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