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New Rules Will Cause Consumers to Pay More in Credit Card Bills

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Ultimately the CFPB’s new rules will force responsible cardholders – who pay their bills on time – to subsidize the costs of those who don’t. Image for illustration purposes
Ultimately the CFPB’s new rules will force responsible cardholders – who pay their bills on time – to subsidize the costs of those who don’t. Image for illustration purposes

Texas Border Business

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US Chamber of Commerce 

On Wednesday, the Consumer Financial Protection Bureau proposed new rules limiting the ability of credit card companies to impose late fees for overdue payments.

Why it matters: Credit card issuers already provide robust disclosures (as required by law) regarding late fees, which consumers agree to at the time of enrollment. Ultimately the CFPB’s new rules will force responsible cardholders – who pay their bills on time – to subsidize the costs of those who don’t.

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But: Don’t take our word for it. In its proposed rule, the agency itself acknowledges this fact.

·  “Cardholders who never pay late will not benefit from the reduction in late fees and could pay more for their account if maintenance fees in their market segment rise in response – or if interest rates increase in response and these on-time cardholders carry a balance. Frequent late payers are likely to benefit monetarily from reduced late fees, even if higher interest rates or maintenance fees offset some of the benefits.”

Our take: “Ultimately, what the American credit card user can expect from this rule change is higher costs and reduced choices as a direct result of the CFPB imposing more red tape on businesses,” said Bill Hulse, vice president with the Center for Capital Markets Competitiveness.

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