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Credit Card Late Fees Will Decrease in 2024

Hannah Locklear | April 23, 2024

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: The CFPB has set a new rule reducing credit card late fees from $32 to $8, which will go into effect on May 14, 2024. This new credit card late fee rule aims to save U.S. consumers over $10 billion a year. It has been met with legal opposition.

In a move poised to save American consumers billions annually, the Consumer Financial Protection Bureau (CFPB) is bringing a significant change to credit card late fees, set to take effect on May 14, 2024. This ruling, which caps late fees at $8, down from the typical $32, aims to alleviate the financial burden on cardholders, especially those who struggle to make payments on time.

The CFPB’s final rule will decrease credit card late fees

After a thorough review and amidst considerable debate, the CFPB has finalized a rule that significantly changes the way credit card companies charge late fees. The rule:

  • Lowers the permissible late fee to $8 for larger card issuers.
  • Ends the practice of automatic inflation adjustments to late fees.
  • Requires issuers to justify fees above the $8 threshold by proving these are necessary to cover collection costs.

This rule aims to protect consumers from what the CFPB describes as "junk fees," and is estimated to save American families over $10 billion annually in late fees.

US Chamber of Congress is fighting against the CFPB

However, the path to implementation is not without hurdles. The U.S. Chamber of Commerce has filed a lawsuit seeking a preliminary injunction to stop the rule, arguing that the CFPB exceeded its authority and relied on inappropriate data. This case, overseen by Judge Mark T. Pittman, could present challenges given his historical rulings against federal government actions.

Furthermore, the rule has sparked contention in Congress, with some members expressing strong opposition, citing political motivations, and others voicing support, highlighting consumer protection.

Reduced credit card fees could help millions of Americans

The implications of this rule are significant. For consumers, especially those among the 45 million Americans charged late fees, this could mean substantial financial relief. For credit card companies, particularly those who have leaned heavily on late fees as a revenue source, this signals a need to recalibrate their business models.

The ACA has expressed disappointment with the CFPB’s characterization of industry practices and is actively engaging its members in discussions on these regulatory changes. With the rule's future partly hanging on legal decisions and congressional actions, the credit card industry and consumers alike are in a state of anticipation.

Stay tuned for more information on credit card late fee rules

As the situation develops, consumers and industry players should stay informed. The ruling has the potential to reshape the credit card fee landscape significantly, and its eventual outcome could have far-reaching implications for personal finance and the broader financial services industry.

Settle your credit card debt

Credit card late fees can cause a snowball effect on debt. Before you know it, debt collectors might be calling and asking you to pay up, and if unsuccessful, you might even get sued. Luckily, you can settle your credit card debt if you’re experiencing life challenges that are making it hard to pay.

Many people ask us how to negotiate debt settlement, so we asked a debt lawyer for some tips on negotiating with creditors and collectors. Here’s what we learned:

  • Show Hardship and Other Debts: Demonstrate financial struggles and other obligations, like other debts or inability to garnish Social Security, to encourage settlement.
  • Avoid Lowball Offers: Propose realistic settlement amounts; too low offers are likely to be rejected.
  • Know Who To Call: When negotiating debt settlement, you will typically contact the debt law firm, not the creditor or debt collector suing. The attorney acts as a middleman between the two parties.
  • Be Prepared for Counteroffers: Expect negotiation and be ready to adjust your offer accordingly.
  • Provide Accurate Financial Information: Be truthful about your financial situation, as creditors often have detailed information about you.

Watch the video below for the full interview with consumer rights attorney, John Skiba:

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