New U.S. rule limiting annoying credit card penalty could save Americans $10 billion

The US authorities on Tuesday introduced a brand new rule that might would cut back the everyday late price for a bank card cost to $8, which is down from $32. According to the Consumer Financial Protection Bureau (CFPB), this may save a median of $220 yearly for 45 million individuals, saving American households over $10 billion per yr.

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The CPFB’s announcement stated that the rule change cuts at “excessive credit card late fees by closing a loophole exploited by large card issuers.”

“Today’s rule ends the period of huge bank card corporations hiding behind the excuse of inflation after they hike charges on debtors and increase their very own backside strains,” CFPB Director Rohit Chopra said in the announcement.

In a separate call before the announcement, Chopra said called this rule as a part of the “junk price period” and that it has entered many parts of the economy.

“We’re simply attempting to verify shoppers and small companies and employees are getting a good shake wherever they go,” Chopra said.

According to the CFPB, banks were able to take advantage of the CARD Act in 2010 which allowed banks to charge $25 for the first late payment and $35 for subsequent late payments, and then adjusting these numbers by inflation. The average fees have gone from $23 per month in 2010 to $32 in 2022.

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Unsurprisingly, the new rule has not been received well by the banks.

“The coverage targets of the CFPB’s bank card late price rule are, at finest, shopper redistribution, not safety,” Consumer Bankers Association president Lindsey Johnson wrote on X (formerly Twitter). “The Bureau’s additionally persevering with its deeply problematic follow of prioritizing headlines on the expense of authorized course of—endangering shoppers’ long-term monetary well being.”

TheAvenue reached out to Bank of America and JPMorgan & Chase for a press release, however they didn’t reply.

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