The U.S. court system has delayed the rule to cap credit card late fees at a maximum of 8 dollars monthly, a win for major banking institutions.
The legislation, a crucial step in protecting consumer interests, was championed by the Consumer Financial Protection Bureau (CFPS) and, unfortunately, was stalled in federal court on Friday, May 11.
Credit card late fee cap stalled
The injunction, halts the implementation of a regulation that would have gone into effect Tuesday, May 14. This new rule would have capped the late fees on American banks at 8 dollars, but they would have lost a strong seam of constant revenue.
CFPB spokesman told CNBC on Friday “Consumers will shoulder $800 million in late fees every month that the rule is delayed — money that pads the profit margins of the largest credit card issuers.”
Judge Mark Pittman of the Northern District of Texas would support the plaintiffs’ pleas for the rule to be delayed. The U.S. Department of Commerce was involved in the suit as one of the most vocal critics of the new rule.
CFPB Director Rohit Chopra said in a March release that his department was “taking action to rein in junk fees on credit cards, increase competition, and put billions of dollars back in the pockets of American families. We are finalizing a rule that will lower the typical late fees charged by big credit card issuers from an average of $32 down to $8 in most cases. We estimate this change will save families $10 billion every year, an average savings of $220 per year for the more than 45 million people who are charged late fees.”
It remains to be seen when this new legislation will be enacted, but for now, the banks still have their lucrative well of monthly billions, at the expense of American families.
Image: Ideogram.
