Letter to CFPB on the RFI Regarding the Consumer Credit Card Market

Dear Sir or Madam:

The American Bankers Association (ABA) is pleased to submit comments to the Consumer Financial Protection Bureau’s (Bureau) Request for Information (RFI) regarding the consumer credit card market. Section 502(a) of the Credit Card Accountability Responsibility and Disclosure Act of 2008 (CARD Act) requires the Bureau to conduct a biennial review of the consumer credit card market, including a review of the terms of credit card agreements and practices and the impact of the CARD Act on the cost and availability of credit, particularly with respect to non-prime borrowers.

The Bureau's periodic review of the credit card market presents an important opportunity to assess the market’s overall health and regulatory direction. In recent years, various misconceptions about the credit card market have led to misguided regulatory actions and legislative proposals that ultimately harm consumers.

For example, the Bureau's prior rulemaking efforts to cap both credit card late fees and overdraft fees under the Truth in Lending Act (TILA) misclassify these fees as "junk fees," undermine risk-based pricing, and disregard their functionality to ensure timely payments and lower overall debt levels. Under the previous administration, the Bureau’s campaign to demonize responsible payment incentives for consumers would have caused undue harm as late payments and increased debt levels can lead to reduced credit scores, thereby increasing the cost of future credit. We appreciate the current Bureau leadership supporting the repeal of these misguided policies.

The Bureau, under the previous administration, also issued a series of misleading "issue spotlights" and other publications that mischaracterize healthy market dynamics, including attacks on consumer rewards programs, pricing structures, and bank competitiveness that are based on opaque methods, biased data samples, and predetermined outcomes. This regulatory pressure is compounded by the Bureau’s prior support for wrong-headed legislative proposals such as the Credit Card Competition Act (CCCA), which would mandate network routing changes that weaken fraud protection and threaten rewards programs, and the 10% annual percentage rate (APR) cap bills introduced in both the House and Senate, which would severely curtail access to small-dollar credit and harm the very consumers they are intended to protect.

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