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Senate Banking Committee Ranking Member Tim Scott (R-S.C.) touted his ICBA-supported resolution to nullify the Consumer Financial Protection Bureau’s final rule on credit card late fees during a committee hearing.
Senate Hearing: During a hearing on “junk fees” in financial services and housing, Scott said the CFPB’s rule would result in lower credit limits and higher interest rates for borrowers along with new fees for services that are currently provided free of charge.
Congressional Challenges: ICBA supports Scott’s Congressional Review Act resolution, which would express congressional disapproval of the rule and nullify its implementation. An ICBA-supported House companion resolution introduced by Rep. Andy Barr (R-Ky.) passed the House Financial Services Committee last month.
Rule Details: The CFPB rule:
Cuts the credit card late fee safe harbor under the CARD Act from the current levels of $30 for the first violation and $41 for subsequent violations to $8, without inflation adjustments.
Applies to issuers with 1 million or more open accounts, which allows the CFPB to avoid analyzing the rule under the Small Business Regulatory Enforcement Fairness Act.
Allows covered issuers to charge fees above the threshold as long as they can prove the higher fee is necessary to cover their collection costs.
ICBA Response: In a national news release after the rule’s release, ICBA said the rule sends the wrong message that punctual credit card payments are not a significant priority, which will harm consumers by leading to more late payments and additional interest charges.