Posted on 04/16/2025 4:53:30 AM PDT by CFW
A federal judge threw out a U.S. Consumer Financial Protection Bureau (CFPB) rule Tuesday that capped all credit card late fees at $8.
U.S. District Judge Mark Pittman of the U.S. District Court for the Northern District of Texas approved a joint motion from a coalition of six business and banking groups, including the American Bankers Association (ABA) and the CFPB to scrap the rule, which was established last year.
The ABA and the U.S. Chamber of Commerce were among the plaintiffs that challenged the rule in U.S. District Court for Northern Texas, arguing the bureau exceeded its statutory authority.
The rule was initially established in March 2024 by the Biden administration. At the time, the CFPB estimated the rule would save families more than $10 billion in late fees annually by reducing the typical late fee that averages $32 to a maximum of $8. That amounts to an average savings of roughly $220 per year for the 45 million people charged late fees.
(Excerpt) Read more at foxbusiness.com ...
I’m not sure why I’m even commenting on this because I’m on the fence. While I can sympathize with creditors who get straddled with so many laws and regulations and people whose debt is difficult to collect, I also do think that it’s right for the penalty for being late on a payment to be large fees. I realize there are a lot of deadbeats out there, but then again, the creditor should not have approved them, or given them much of a credit line. But people who have lost income, or suffered a bad health crisis, and miss a payment or two should not have lots of extra debt heaped on them on top of what they already couldn’t pay. I feel like there should be some other type of punitive action besides exacerbating the debt itself.
... do NOT* think it’s right for the penalty to be large fees.
The problem is if the fees are too low, more and more people will deprioritize making their payments. It is a tough issue.
I’m a low-end landlord. I could assess substantial penalties for late payments. I never have. The reason is most of these people are already on the edge. An extra fee will push them over. I don’t want to throw out an otherwise good tenant. Forget the turnaround cost, which is generally a few months’ rent and some downtime. The next one will have some of the same problems. It’s the nature of the beast.
I havent owned a credit card in over 25 years... I like it this way.
I dislike credit card companies. They are predatory as all get-out. I didn’t even know about this cap (because I am never late) but if I had, it would have been one of the few things Biden did that I didn’t hate.
You sound like a good person, as well as being very sensible about reading situations. I think it is admirable that you can assess that pushing someone deeper into debt only works against your own goals as a landlord as well as the tenent.
I am very sympathetic to small landlords and renters (large corporate land management companies can afford lawyers). I have known people who have owned rental properties, and covid was h311 for them. It seems like everything is stacked against you.
I was really focused specifically in my comments about large credit card companies.
:: but then again, the creditor should not have approved them ::
Creditors were also hamstringed with approval rules.
I had a credit card and I would pay it off every month.
This company would receive my electronic payment on time, but would not credit it to my account until it was late and then charge me a fee.
Every month this would happen.
Every month I would call them and get the charge reversed.
Until they didn’t.
The friendly service rep on the line told me, and I quote, If I wasn’t a deadbeat this would not happen.
I cancelled that card.
The biggest problem with credit card companies is their interest rates. Some are as high as 29% for high credit risks. Pre-1980s, many states had usury laws imposing strict caps on interest. The Depository Institutions Deregulation and Monetary Control Act of 1980 allowed much higher interest rates negating state usury laws. The rates we see are the result of this Act.
I’d rather it be a ladder type situation. First time, 8 dollars, second time 10 dollars all the way up to 50 dollars for time number ten or some variation.
Please tell us co name
“I’m not sure why I’m even commenting on this because I’m on the fence. While I can sympathize with creditors who get straddled with so many laws and regulations and people whose debt is difficult to collect, I also do think that it’s right for the penalty for being late on a payment to be large fees. I realize there are a lot of deadbeats out there, but then again, the creditor should not have approved them, or given them much of a credit line. But people who have lost income, or suffered a bad health crisis, and miss a payment or two should not have lots of extra debt heaped on them on top of what they already couldn’t pay. I feel like there should be some other type of punitive action besides exacerbating the debt itself.”
I agree and will back you up on that... While there are going to be a whole bunch who holler that CC companies have the right to be greedy as they like beyond reason or fairness, they are not considering the true cause and effect. The true losers are not the CC companies. The true losers are the taxpayers. These CC customers are going to end up having no choice but to declare bankruptcy. Which the CC companies will write off as a loss, which will in turn reduce federal tax revenue. So while folks will also holler “self responsibility” they do not stop to think that the extra the CC companies will be charging that makes the debt less likely to even get paid is going to cost THEM and the Nation as a whole in the long run.
So THEY will end up paying this extra debt instead of the card holder. When if it was fair and not gouging the Card Holder themselves might actually be able to pay it and not have to declare bankruptcy and saddle the debt/loss of revenue onto the taxpayers.
Nasty. They don’t deserve your business.
I like that idea.
But Biden used executive fiat to get what he wanted and it was struk down. So it would have to be a law, and at the least you would want to build in a measure so that the law does not get old and pointless if inflation gets out of hand. An 8 dollar first penalty isn’t bad today, but in 1970 would have sounded outrageous, and in 2050 would be useless.
why don’t they force companies to lend money at fixed rates that are very low? and force them to lend to anyone with minimal qualifications for credit worthiness?
I’m sure the resulting contraction in credit and elevation of fees and costs on all the good credit customers will be worth it. along with reduced interest payout on savings customers. and increased business loan interest and fees
amex
Good point. Biden never understood economics or much of anything else.
“The biggest problem with credit card companies is their interest rates. Some are as high as 29% for high credit risks.”
Absolutely... And it jumps to this rate if you are even one day late on ONE payment. And COMPOUNDED DAILY which means you are paying interest on the interest in a 30 day period.
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