WASHINGTON–Credit unions are continuing to push back aggressively against the CFPB’s proposed new rules on credit card late fees.
As CUToday.info originally reported here, that proposal would lower the safe harbor to $8 (down from $30 for first time and $41 for subsequent late payments), end the automatic annual inflation adjustment, and cap fees at 25% of the minimum payment.
“The proposed rule is really disappointing in that it has the potential to fundamentally change the economics of credit card markets and the ability of financial institutions to offer credit card products,” said NAFCU VP-Legislative Affairs Ann Petros. “The $8 cap on late fees really is unreasonably low. It doesn't even come close to covering the cost of servicing late payments on credit card accounts, and could jeopardize a lot of the services and other products that credit unions are able to offer and the good work that they're able to do in their communities because the revenue that's going to be lost from these fees is going to have to be recouped elsewhere.
‘Unfortunate’ Rule
“It's unfortunate to see a rule that really doesn't in any way acknowledge the deterrent effect of these late fees and, in fact, would make it so that those consumers who do pay their credit card bills on time receive absolutely no benefit and may even be disadvantaged because other fees may have to be placed on this type of product or other services, again, to recoup the lost revenue,” Petros continued. “It is disappointing to say the least.”
Petros said NAFCU is now working on collecting data and information from its member credit unions in order to provide a very detailed response to the CFPB, including information about the market the Bureau says it doesn’t currently have.
Additional Disappointment
Petros said it’s additionally disappointing to see the CFPB “blatantly flout their procedural responsibilities” in proposing the rules without having all of the data it needs.
“The CFPB has to come up with the data to ensure that any proposed changes it is planning to implement is fully justified, and if they don't have the data then they have to go get it,” Petros said.
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