CEI praises measure to overturn CFPB’s destructive price controls on credit card late fees

On Wednesday, the House Financial Services Committee is expected to approve a Congressional Review Act (CRA) resolution sponsored by Rep. Andy Barr (R-KY) to overturn the Consumer Financial Protection Bureau’s new rule sharply limiting credit card late fees. CEI Director of Finance Policy John Berlau praises the resolution and explains why the CFPB rule it seeks to overturn would do consumers far more harm than good.

“My CEI colleagues and I strongly support the CRA resolution from Rep. Barr – as we did the earlier one introduced by Rep. Andy Ogles (R-TN) — to overturn the CFPB’s highly destructive price controls. The CFPB final rule on credit card late fees mandates a hard price cap of $8 that credit unions and banks issuing credit cards may not exceed. As we have stated before, such a stringent price control is bad economics anytime but is especially harmful during times of inflation. If not stopped, the CFPB regulation will have negative consequences for many middle-class and lower-income consumers.

“As the CFPB itself acknowledged in proposing this rule, restrictions on the ability to charge late fees on credit cards will translate into higher charges for the vast majority of consumers who make their payments on time. The CFPB is proposing price controls that will raise the overall cost of credit for everyone by disincentivizing credit providers who take on risk by offering credit that may not be repaid.

“The House is doing the right thing in attempting to overturn this deeply flawed rule to free consumers and Main Street financial institutions from another piece of harmful red tape, and the Seante should follow suit.”

Related analysis:

• Public comments filed on credit card late fee rule 
• Blog analysis: New credit card late fee rule hurts folks who pay their bills on time