CFPB Releases Report on Credit Card Fees

Credit card late fees account for over half of the credit card market’s total consumer fees, according to a report issued today by the CFPB. The dollar value of late fees paid by consumers has fluctuated slightly year-over-year between 2018 and 2020, but consistently represented about one-tenth of the total paid by consumers in interest and fees, the CFPB noted. Late fee volumes fell during 2020 and 2021, which was likely attributable to COVID-19 stimulus payments. The report also noted that a majority of the nation’s top card issuers have set late fees at or near the maximum level set by the Federal Reserve pursuant to the CARD Act.

The report acknowledged that “the degree to which companies rely on revenue from late fees varies,” however, in a press release accompanying the report, CFPB Director Rohit Chopra made a blanket statement that “many credit card issuers have made late fee penalties a core part of their profit model.”

In a comment to media outlets this afternoon, the American Bankers Association noted that the report “is yet another example of the CFPB criticizing the financial services industry for following the very rules the bureau sets.” The association added that the CARD Act and the CFPB’s own regulations already require banks to disclose credit card terms and fees in a clear and conspicuous manner, and late payment and over-limit fees are specifically capped by the CFPB. “Left out of this report is any mention of the millions of consumers who value and appreciate the safety and convenience provided by the credit cards they use every day, as well as the wide array of options they have to choose from when they pick a credit card,” the association said.

ABA recently released its own data addressing consumers’ attitudes on the fees charged by their banks for products including credit cards, and well over half—62%—agreed that bank fees were reasonable, while an even higher percentage—83%—said their bank was transparent about disclosing fees.