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  • Frank Tian

๐Ÿ’ณ CFPB Caps Card Late Fee

The details of card late fee rule-making are out. ๐Ÿ‘‡


CFPB proposes an $8 cap,

Within 25% of the required payment,

No automatic annual inflation adjustment.


This is in the works for a while, thus should not be a total surprise to industry participants.



๐ŸŸฆ The Background


In Jan 2022, the regulator set its eyes on so-called junk fees and opened a 3-month period for public comments.


After driving down the hefty overdraft fee along with challengers and customer advocacy, the next target is the credit card late fee.


In Mar 2022, CFPB published a 17-page report on the card late fee.



๐ŸŸจ The Impact


The card late fee accounts for ~10% of the total card interest and fees. Other revenue streams include financial interest charges, interchange fees, annual fees, etc.


The average late fee was $31 in 2019. A cap of $8 will reduce the late fee by ~75%, or ~7.5% of total card interest and fees.


It is time for card issuers to update their financial models and reduce their dependency on punitive fees.



Graph source: CFPB, March 2022.


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