National CAPACD Applauds CFPB’s Proposed Rule to Curb Excessive Credit Card Late Fees

The National Coalition for Asian Pacific American Community Development (National CAPACD) applauds the Consumer Financial Protection Bureau (CFPB) for its proposed rule to address excessive credit card late fees. Most notably, the proposal includes an $8 cap on late fees for the largest credit card issuers, a significant reduction from the $32 they typically charge. The CFPB estimates this will save consumers $10 billion each year, which helps secure the financial well-being of vulnerable individuals and families within our communities.

The CFPB’s proposal comes as a response to longstanding concerns regarding the detrimental effects of exorbitant credit card late fees, as well as an over-reliance on costly late fees to raise banking industry profits. Late fees have disproportionately burdened low-income Asian American, Native Hawaiian, and Pacific Islander (AA and NHPI) households, other communities of color, and additional cash-strapped families who live paycheck to paycheck. According to CFPB research, individuals with lower incomes often incur larger fees due to their smaller credit card balances. This contributes to their financial insecurity, making them susceptible to predatory lending practices and financial exploitation.

National CAPACD believes that the proposed rule will have a positive impact on low-income AA and NHPI communities, especially those unfairly burdened by financial challenges and economic inequalities. By establishing a maximum late fee of $8, the CFPB aims to provide relief to families who are struggling to make ends meet, allowing them to better manage their finances and avoid falling deeper into debt.

“We commend the CFPB for taking action to address the unjust practices that have harmed countless consumers, including low-income Asian American, Native Hawaiian, and Pacific Islander households,” remarked Seema Agnani, Chief Executive Officer of National CAPACD. “For too long, these communities have borne the brunt of unfair financial practices, which includes exorbitant late fees that contribute to the economic hardships they face. It also marks an important step toward promoting financial security for all Americans. By capping late fees and ensuring they are reasonable and proportional, the CFPB is empowering consumers to navigate the financial system with greater security and dignity.”

National CAPACD stands behind the CFPB in its efforts to protect consumers from unfair and exploitative practices in the credit card industry. We urge stakeholders and policymakers to support the proposed rule to ensure that all Americans, especially low-income AA and NHPIs and other financially vulnerable households, have access to fair, transparent, safe, and affordable financial products and services.

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