The payments landscape for community banks is changing rapidly as traditional payments converge with new instant payment systems and emerging cryptocurrencies. It is critical for Community Banks to maintain awareness of developments in the payments space to assess new opportunities, mitigate risks, and ensure that their payment strategy aligns with overall business plans.

Payments News

CFPB targets credit card late fees in ‘junk fee’ effort

March 30, 2022

The Consumer Financial Protection Bureau said credit card issuers charged $12 billion in late fees in 2020 and that many have made these penalties “a core part of their profit model.”

Details: The CFPB—which is reporting on late-payment fees as part of its initiative targeting “junk fees”—also said:

  • It expects credit card issuers to hike fees due to inflation.

  • Many major issuers charge the maximum late fee allowed under immunity provisions set by the Federal Reserve Board in 2010.

  • Subprime and private-label cards are particularly susceptible to late fee charges.

  • Late fee volume fell when stimulus checks arrived in 2020 and 2021, particularly for households with lower credit scores.

  • Low-income areas, areas with high shares of Black Americans, and areas with lower economic mobility are disproportionately affected.

Comment Period: The CFPB recently extended until April 11 the deadline to comment on "exploitive junk fees" charged by financial institutions.

ICBA Response: ICBA has called the request for information a "misguided effort that paints a distorted and misleading picture” of the industry while reiterating that community banks already follow multiple federal laws and the CFPB's own rules requiring them to clearly disclose terms and fees.