U.S. Sens. John Fetterman (D-PA), Cory Booker (D-NJ), and Tammy Baldwin (D-WI) introduced legislation that would cap credit card late fees.
Specifically, the Credit Card Fairness Act would put into statute the Consumer Financial Protection Bureau’s $8 cap on credit card late fees.
Currently, consumers currently pay $14 billion per year in credit card late fees. The lawmakers said that the standard $30 to $41 late fee is up to five times higher than the cost for banks of collecting late payments.
The Consumer Financial Protection Bureau previously enacted a rule that capped these fees at $8, which was stalled in litigation brought by the big banks. This bill would codify the $8 cap into law.
“Big banks profiteering off people by charging $41 for a single late credit card payment is absolutely wrong,” Fetterman said. “At a time when people are struggling to get by, these late fees are only doing more harm. This legislation will protect hardworking Americans from predatory fees, and I’ll work with anyone to get this over the finish line.”
Booker said consumers shouldn’t be hit with predatory late fees that are three to five times higher than the actual cost of collection.
“As costs continue to skyrocket under this administration — from groceries, to housing, to health care — Wisconsin families are already stretched thin. The last thing they need is big banks and credit card companies gouging them with credit card late fees that make it harder to stay afloat, let alone get ahead,” Baldwin said. “Our bill will crack down on big banks, cap late fees at $8, and give families a little breathing room.”
The bill is endorsed by Americans for Financial Reform, the Consumer Federation of America, Groundwork Collaborative, the National Consumer Law Center (on behalf of its low-income clients), Public Citizen, and Protect Borrowers.
“Penalty fees shouldn’t be profit centers,” Adam Rust, director of financial services for the Consumer Federation of America, said. “Families shouldn’t have to choose between paying an exorbitant late fee or meeting their basic needs. The Credit Card Fairness Act sets a reasonable cap on credit card late fees, restoring a standard of fairness and affordability to the cost of consumer credit.”