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ARTICLE · 08 MARCH 2024

The CFPB Finalizes Credit Card Late Fee Rulemaking

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On March 6, the CFPB finalized its credit card late fee rule (previously discussed here) aimed at ensuring that late fees charged on consumer credit card accounts...

United StatesFinance and Banking
Moorari K. Shah
Moorari K. Shah
A.J. Dhaliwal
A.J. Dhaliwal
Mehul Madia
Mehul Madia
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On March 6, the CFPB finalized its credit card late fee rule (previously discussed here) aimed at ensuring that late fees charged on consumer credit card accounts are "reasonable and proportional." The rule amends Regulation Z, which implements the Truth in Lending Act, in two key ways:

  • Lowers the safe harbor amount for late fees. Under current law, TILA permits credit card companies to assess late fees to consumer of $30 for the first missed payment, and $41 for subsequent missed payments. As expected, the rule lowers that safe harbor amount to $8 per each missed payment. Credit card companies seeking to assess late fees in excess of the proposed $8 safe harbor amount would be required to provide proof that the fee amounts are proportional to collection costs. The $8 late fee safe harbor amount only applies to credit card issuers that have 1 million or more open accounts (who, according to the CFPB, constitute the issuers with 95% of total

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