The CFPB today proposed a rule intended to curb “excessive” credit card late fees that the bureau says costs American families about $12 billion each year.
Comments are being accepted on the proposed rulemaking, which would amend Regulation Z, which implements the Truth in Lending Act (TILA), to help ensure that late fees charged on credit card accounts are “reasonable and proportional” to the late payment as required under TILA.
The proposed changes would, if finalized, would:
- lower the immunity provision dollar amount for late fees to $8;
- end the automatic annual inflation adjustment; and
- cap late fees at 25% of the required minimum payment.
The proposal also seeks comment on other potential changes to CARD Act regulations. For instance, it requests comment on:
- whether the CFPB’s proposed changes should apply to all credit card penalty fees;
- whether the immunity provision should be eliminated altogether;
- whether consumers should be granted a 15-day courtesy period, after the due date, before late fees can be assessed; and
- whether issuers should be required to offer autopay in order to make use of the immunity provision.
Comments will be accepted on or before April 3, 2023, or within 30 days after publication of the Notice of Proposed Rulemaking in the Federal Register, whichever is later.