Sen. Scott introduces measure to overturn CFPB’s credit card late fee cap rule

U.S. Sen. Tim Scott (R-SC) introduced a resolution that seeks to overturn the Consumer Financial Protection Bureau’s (CFPB) rule that puts a cap on credit card late penalties.

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The CFPB’s rule, which was finalized in March, closed a loophole exploited by large card issuers that it says will cut late fees by more than $10 billion a year. The rule will reduce the typical late fee cap from $32 to $8, which will result in an average savings of $220 per year for the more than 45 million people who are charged late fees.

Scott argues that the rule will decrease the availability of credit card products and financial services, particularly for Americans who need them most, raise rates for many borrowers who carry a balance but pay on time, and increase the likelihood of late payments across the board.

“Lawful and contractually agreed upon payment incentives promote financial discipline and responsibility, and this rule shows that the CFPB is more focused on scoring political talking points than policies that protect consumers,” Scott, ranking member on the Senate Banking Committee, said.

Scott’s Congressional Review Act (CRA) resolution has the support of Republicans on the committee as well as others in the Republican conference. Among the supporters are Sens. John Thune (R-SD), John Barrasso (R-WY), Jerry Moran (R-KS), John Boozman (R-AR), Steve Daines (R-MT), Mike Rounds (R-SD), Thom Tillis (R-NC), Marsha Blackburn (R-TN), Kevin Cramer (R-ND), Mike Braun (R-IN), Bill Hagerty (R-TN), and Katie Britt (R-AL).

The resolution also has the support of the Consumer Bankers Association, America’s Credit Unions, Independent Community Bankers of America, Bank Policy Institute, American Bankers Association, Americans for Tax Reform, Competitive Enterprise Institute, and the U.S. Chamber of Commerce.