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credit card late fees
House Progressives Rip GOP for Siding With Credit Card Giants on Junk Fees
"It is critical that the American people understand the House Republican Conference's firm and dedicated commitment to protecting the business model of unfettered, predatory fines."
Jul 17, 2024
Members of the Congressional Progressive Caucus on Wednesday slammed their House Republican colleagues for siding with credit card giants over U.S. consumers by attempting to roll back a Biden administration rule banning excessive late fees—a major profit source for card issuers.
The House's Republican majority is expected in the near future to schedule a floor vote on a GOP-authored resolution that would use the Congressional Review Act to undo the Consumer Financial Protection Bureau's (CFPB) rule lowering the typical credit card late fee from $32 to $8.
The CFPB is currently
fighting a Trump-appointed judge's injunction against the rule, which the agency estimates would save Americans more than $14 billion a year in fees.
In a letter to House Speaker Mike Johnson (R-La.), Rep. Pramila Jayapal (D-Wash.)—the chair of the CPC—and more than 50 fellow caucus members welcomed the "opportunity to highlight the Republican majority's enthusiastic support for junk fees, including exorbitant credit card fees."
The letter continues:
We think it is critical that the American people understand the House Republican Conference's firm and dedicated commitment to protecting the business model of unfettered, predatory fines imposed by large corporate banks against ordinary Americans. Thanks to the leadership of the Biden Administration and the CFPB, Americans will collectively receive $10 billion in annual relief from this rule, curbing junk fees levied by profitable credit card giants on consumers.
We look forward to a promptly scheduled vote that allows every House Republican to go on the record opposing an initiative that will rein in a loophole exploited by corporate giants to boost their profits at the expense of American households and create an average savings of $220 per year for more than 45 million people who are charged late fees by large credit card companies.
"We are unsurprised that House Republicans uniformly insist on defending large corporate banks’ current practice of overcharging Americans with credit card late fees," the progressive lawmakers added, "and welcome the opportunity to highlight the contrast in our priorities on the House floor this summer."
A new @POTUS + @CFPB rule means big banks won’t be able to charge over $8 in late fees for credit card payments.
Surprising no one, @HouseGOP is trying to block it 🫠@SpeakerJohnson: bring this bill to a vote & make your members' support for predatory junk fees official. pic.twitter.com/JuzHU921ur
— Progressive Caucus (@USProgressives) July 17, 2024
The House GOP's defense of junk fees undercuts the election-year narrative of ascendant pro-worker populism within the Republican Party, which is working aggressively to overturn labor protections enacted by the Biden administration.
In April, Republicans on the House Financial Services Committee voted unanimously to advance Rep. Andy Barr's (R-Ky.) resolution to undo the CFPB's rule on late fees. Every Democrat on the panel voted no.
The House Republicans who backed Barr's resolution have received millions of dollars in donations from leading credit card issuers and industry groups fighting the CFPB rule, according to the progressive watchdog group Accountable.US.
Sen. Tim Scott (R-S.C.), a vocal supporter of Republican presidential nominee Donald Trump, is leading the Senate effort to roll back the CFPB rule and has criticized the Biden administration for characterizing credit card late-payment penalties as "junk fees."
According to OpenSecrets, Goldman Sachs employees, executives, and PACs have been Scott's largest campaign contributors over the course of his Senate career.
Sen. Elizabeth Warren (D-Mass.) said during a Senate Banking Committee hearing last month that Republicans are "falling all over themselves to defend these junk fees."
"If you're wondering why Republicans are introducing legislation to protect junk fees and working overtime to come up with fantastical legal theories to kill the CFPB, I think the answer is pretty clear," said Warren. "Republicans are in bed with big business to rip off families and to protect corporate bottom lines."
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Trump-Appointed Judge Halts Biden Rule Capping Credit Card Fees
"The U.S. Chamber got its way for now—ensuring families get price-gouged a little longer with credit card late fees as high as $41," one advocate said of the ruling.
May 12, 2024
A Trump-appointed judge on Friday delivered a win for big banks when he granted the U.S. Chamber of Commerce a temporary injunction halting a Biden administration rule that would cap credit card fees at $8.
The Consumer Financial Protection Bureau (CFPB) rule, which would have gone into effect May 14, could save U.S. consumers more than $10 billion each year. The decision to pause its implementation, issued by U.S. District of the Northern District of Texas Judge Mark Pittman, will cost ordinary Americans around $27 million each day it is in effect.
"In their latest in a stack of lawsuits designed to pad record corporate profits at the expense of everyone else, the U.S. Chamber got its way for now—ensuring families get price-gouged a little longer with credit card late fees as high as $41," Liz Zelnick, the director of the Economic Security and Corporate Power Program at Accountable.US, said in a statement.
"It's time the U.S. Chamber stops clogging the courts with baseless lawsuits designed to enrich corporate CEOs on the backs of working families—and it's time the judiciary stops legitimizing venue shopping from big industry."
The CFPB issued the rule on March 5 as part of the Biden administration's commitment to crack down on "junk fees." However, the Chamber of Commerce and other banking trade associations—including the American Bankers Association and the Consumer Bankers Association—quickly sued to block it. The executives of Bank of America, Capital One, Citibank, and JPMorgan Chase sit on the boards of the groups behind the suit, according toThe Washington Post.
"Banks make billions in profits charging excessive late fees," Sen. Elizabeth Warren (D-Mass.) wrote on social media Saturday in response to the ruling. "Now a single Trump-appointed judge sided with bank lobbyists to block the Biden administration's new rule capping these junk fees."
Accountable.US also criticized the fact that the suit was before Pittman at all, arguing that the U.S. Chamber of Commerce filed the suit in Texas federal court so that it would end up under the jurisdiction of the 5th Circuit Court of Appeals, which has 19 Republican-appointed justices out of a total of 26. The chamber has filed nearly two-thirds of its lawsuits since 2017 with courts covered by the 5th Circuit.
"The U.S. Chamber and the big banks they represent have corrupted our judicial system by venue shopping in courtrooms of least resistance, going out of their way to avoid having their lawsuit heard by a fair and neutral federal judge," Zelnick said. "It's time the U.S. Chamber stops clogging the courts with baseless lawsuits designed to enrich corporate CEOs on the backs of working families—and it's time the judiciary stops legitimizing venue shopping from big industry."
The 5th Circuit's treatment of the case has also come under fire, as Trump-appointed Judge Don Willett has not recused himself despite the fact that he owns tens of thousands of dollars in Citigroup shares. While Willett has argued that Citigroup is not a party to the case, it belongs to trade groups that are, and any ruling on credit card fees would significantly impact the bank. Collectively, all the judges on the 5th Circuit have invested as much as $745,000 in credit card or credit issuing companies, according to the most recent publicly available information.
Donald Sherman, Gabe Lezra, and Linnaea Honl-Stuenkel of Citizens for Ethics in Washington wrote: "Judge Willett's refusal to recuse, and the lack of transparency about the rationale, reinforces the need for more judicial ethics reform to ensure that everyday Americans and government agencies have a level playing field when they go into court against corporate interests."
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The Biden Administration Is Right to Curb Predatory Bank Fees
When banks hit people with an overdraft fee, they end up further in the hole—to the benefit of the bank.
Apr 07, 2024
Poverty is expensive in this country.
Few things illustrate that truism like overdraft charges and late fees, which are often little more than outrageous penalties for not having enough money. But there are plans in the works at the Consumer Financial Protection Bureau (CFPB) to rein in these abusive practices.
Overdraft fees occur when a customer attempts to withdraw more money from their account than is available, but the banking institution covers the transaction—for a fee. The CFPB is proposing rules to close loopholes in rules on overdraft fees by establishing a benchmark that banks cannot exceed.
Consumers will appreciate strong action on these issues. And consumers vote!
Over a quarter of Americans live in a household that was charged an overdraft fee in the past year, but especially harmed are those who have the least to begin with. These overdraft fees are structured to prey on consumers already in a financially precarious position. The impact skews toward low-income households and people of color. Young people are also more likely to be affected.
When banks hit people with an overdraft fee, they end up further in the hole—to the benefit of the bank. “Overdraft fees are not so much a useful service as they are a lucrative profit center underwritten by the most economically vulnerable consumers,” said Kimberly Fountain, consumer field manager at Americans for Financial Reform.
Overdraft fees affect credit scores and can even lead to account closures, leaving people without access to banking services altogether. More than any other group, Black Americans tend to be underbanked or unbanked.
As with overdraft fees, banks foist the burden of late fees on people living paycheck to paycheck, low to moderate income consumers, and people of color.
More than 80% of adults have at least one credit card—and these cards are full of junk fees. Late fees alone cost consumers $14 billion a year—and low-income earners pay about twice as much in fees as higher-income earners.
These late fees are not based on any sort of need for the bank. The CFPB found that banks take a fee almost five times greater than the cost to the bank of a late payment.
These practices also reinforce the racial wealth gap. Data shows that banks have often charged those living in neighborhoods with populations of color a higher interest rate. And places with a higher Black or Hispanic population are charged on average more than $25 in late fees, while in places where the Black population is nearly zero, people pay less than $20.
In a new consumer protection action, the CFPB is limiting the amount companies can charge for a late fee to a more reasonable $8.
Fee reforms work. In 2009, Congress passed the Credit CARD Act, which required banks to give consumers enough time to pay their bills, eliminated retroactive rate increases, and curbed excessive marketing to young adults. Careful study of the CARD Act found that the market became more transparent and many fees went away. By 2013, the law was saving Americans $20.8 billion a year.
Consumers will appreciate strong action on these issues. And consumers vote! About 82% of U.S. adults support lowering the maximum late fee, 68% support the 15-day grace period, and 84% support requiring companies to remind consumers of late fees.
The CFPB should keep at it. Making ends meet in this country is hard enough without being charged for coming up short.
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