ARLINGTON, VIRGINIA – Today, the American Consumer Institute, a leading consumer policy group, opposed the Consumer Financial Protection Bureau’s (CFPB) new proposal to cap late fees on credit card payments.
Steve Pociask, the president of ACI, said the following:
“Rather than help consumers, the rule will increase costs for all consumers, including those who pay their bills on time. Banks and credit card issuers will be forced to raise interest rates or reduce credit lines to mitigate the financial risk of more frequent late payments. This shift could penalize responsible consumers, forcing them to bear the cost for those who fail to meet payment deadlines.
Even worse, the rule will constrain access to credit, particularly for new and low-income consumers. Credit card issuers will be forced to strengthen their lending standards, making it harder for at-risk population segments to obtain credit. Rewards programs, which offer significant benefits to consumers across various income levels, will be curtailed or eliminated simultaneously.
Higher late fees are a crucial incentive for consumers to manage their finances responsibly and make timely payments. Reducing these fees will encourage lax financial behavior, negatively affecting consumers’ credit scores and long-term financial health.
This rule is nothing more than a political exercise aimed at blustering President Biden’s war on junk fees. Ultimately, however, a junk fee will increase consumer costs.”
For media inquiries, please email [email protected] to inquire about the above content.
The American Consumer Institute is a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.