ICBA raised concerns with a new Consumer Financial Protection Bureau proposed rule on credit card late fees and the bureau’s mischaracterizations of community bank credit card lending.

Proposed Rule: Among its provisions, the CFPB’s proposal would:

  • Lower the immunity provision dollar amount for late fees to $8, down from the current safe harbor limits of $30 for the first late payment and $41 for a subsequent late payment within six billing cycles.

  • End the automatic annual adjustment that indexes permissible late fees to inflation.

  • Cap late fees at 25% of the required minimum payment.

Chopra Statement: In announcing the proposal, CFPB Director Rohit Chopra said the bureau worries that credit card companies “are actually hoping that consumers are a day or two late” to incur fees.

ICBA Response: In a national news release, ICBA President and CEO Rebeca Romero Rainey cautioned the CFPB against adversely affecting small issuers, needlessly restricting access to credit in local communities, and mispresenting how community banks meet the credit card needs of their customers.

Current Practices: “Credit card late fees—which are clearly disclosed and represent a small portion of the cost of credit cards to customers—deter late payments and help offset the significant costs to issuers,” Romero Rainey said. “Considering these costs, current practices are appropriate and do not constitute ‘junk fees,’ despite the CFPB’s misrepresentation of the community bank business model.”

SBREFA Process: In the statement, ICBA reiterated its call for the CFPB to seek input from small financial institutions under the Small Business Regulatory Enforcement Fairness Act, as ICBA said in a recent joint letter and in formal comments last year.

Outlook: ICBA said it intends to work closely with the CFPB to mitigate the negative impact of this rulemaking on access to credit in local communities and to avoid further mischaracterizations from the bureau.