ABA: Bank fees play important economic role

Fees charged by banks recover costs, encourage sustainable financial behavior, support the affordable pricing of financial services and are consistent with prudent risk management, the American Bankers Association said today in a statement to the Senate Banking Committee. The committee held a hearing on fees charged by several industries—including banks—for a variety of purposes. In its comments, ABA pushed back against accusations that bank fees amount to “junk fees” that harm consumers. It also urged lawmakers to conduct robust oversight of the CFPB’s campaign against legal and disclosed fees, such as its proposed rulemaking on credit card late fees and late payments.

ABA noted that the CFPB late fee proposal will harm consumers and impact cost and access to credit.

“Limiting the ability of issuers to allocate the cost and risk of late payments to the late-paying population will force issuers to spread these costs across all consumer cardholders,” ABA said. “Moreover, without an effective incentive to pay on time, late payments and associated costs will increase. As a result, the cost of credit will increase, credit availability will drop, and rewards and other credit card features will decline, and some may disappear.”

Credit cards are widely popular financial products that provide valuable consumer benefits, ABA said. “Unlike the bureau’s mischaracterization of late fees, consumers understand late fees and recognize the importance of late fees in promoting responsible consumer behavior and more efficiently allocating costs.”