A new Consumer Financial Protection Bureau rule to cap credit card late fees at $8 is the latest move to turn banks into essentially regulated utilities, hurting consumers in the process, according to a Wall Street Journal editorial today. In the opinion piece, the newspaper’s editorial board accuses the Biden administration of playing “whack-a-bank” by targeting late fees and other potential bank revenue streams with little regard for how consumers would be affected.
“The CFPB’s rule slashes the cap to $8 and eliminates the annual inflation adjustment,” the editorial states. “Yet as even the CFPB acknowledges, the lower penalty may cause more borrowers to pay late, and as a result incur higher ‘interest charges, penalty rates, credit reporting and the loss of a grace period.’ This would make it harder to qualify for an auto loan or mortgage.”
The editorial further notes that the agency concedes the rule would mean some credit card issuers will likely need to raise interest rates, but because some states cap rates, some consumers could lose access to credit as a result. “Consumers are the biggest losers, as we’ve learned from other such price controls,” the editorial states.
