Credit card late fees are the worst of all time. 😠💳 Sky-high interest rates on balances already suck. Miss your due date and you're on the hook for even more money that's better spent elsewhere…. like some chili dogs outside the Tastee Freez! 😛🌭
However, there's a chance you could get a break on those late fees. 😮💨 A new proposed rule from the Consumer Financial Protection Bureau (CFPB) wants to cut them down to only $8.
Here’s Five Fast Facts on the new proposal:
- 🫴 Sounds Reasonable - According to today's credit card rules, card companies are allowed to charge you a late fee that's “reasonable and proportional” to the payment due. They can automatically charge you $30 for your first late payment and up to $41 for additional ones. However, they can charge you even more (up to 100% of your minimum payment) if they can justify the need.
- 🆒 Major Reduction - The CFPB's new rule proposes cutting the automatic late fee down to $8 per late payment. If the card company determines its costs for handling late payments is more than $8, the rule would allow it, but no more than 25% of a minimum required payment.
- 🧮 Do the Math - To break it all down, say your minimum payment on a credit card is $100. If you paid late, you could be charged up to $41 or as much as $100 in late fees. Under the new rule, you'd get hit with an automatic $8 penalty or no more than $25.
- 📝 A Little Somethin' Extra - The new rule would also prohibit credit card companies from adjusting their late fees for inflation. Additionally, the CFPB might consider whether or not card holders should get a 15-day grace period after their original payment is due. In other words, you wouldn't get hit with a late fee until 15 days past your due date.
- 🤑 Fees for Days - The CFPB estimates that, if passed, the new rule could save consumers around $9 billion a year. Credit card companies collected $12 billion in late fees in 2020.
🔥Bottom line: Not a shocker, but big banks are against the proposed changes. They even wrote a 39-page letter to whine about it. Their argument is that the new rules favor the minority of people who default on their payments and it comes at the expense of responsible bill payers. Fair enough! They'd also be missing out on tons of fee-related revenue, but that's none of our business. 🐸☕
Could you use a reduction in credit card late fees?
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