ABA Statement on CFPB’s Final Credit Card Late Fee Rule

“Today’s flawed final rule will not only reduce competition and increase the cost of credit, but will also result in more late payments, higher debt, lower credit scores and reduced credit access for those who need it most. The Bureau’s misguided decision to cap credit card late fees at a level far below banks’ actual costs will force card issuers to reduce credit lines, tighten standards for new accounts and raise APRs for all consumers – even those who pay on time. It comes as the CFPB continues to use misleading blog posts and irresponsible press statements to paint an inaccurate and distorted picture of today’s highly competitive credit card market, which offers consumers a wide variety of card programs and features they value – provided by banks of all sizes across the country. Just days before the State of the Union, this supposedly independent agency is clearly choosing to put politics over sound public policy.

“In creating today’s final rule, the CFPB relied on flawed assumptions and a mischaracterization of the important role late fees play in promoting responsible consumer behavior. Not surprisingly, the Bureau disregarded industry data about the true cost of late payments. It is highly unusual for a final rule to remain essentially unchanged from its proposal despite detailed stakeholder comments offering reasonable alternatives. This final rule makes clear that the CFPB’s mind was made up from the beginning – the very definition of an arbitrary agency action. We will closely review this final rule and consider all options to fight the harmful consumer policy coming out of Director Chopra’s CFPB. This rule should not be allowed to go into effect.”