June 30, 2023

Senator Warren Renews Call for CFPB to Rein in Unreasonable Credit Card Late Fees

“This proposed rule is necessary to protect American consumers from the predatory practices of greedy financial institutions and furthers the Biden Administration’s efforts to root out junk fees”

Text of Letter (PDF) | Responses from Credit Card Issuers (PDF)

Washington, D.C. – United States Senator Elizabeth Warren (D-Mass) sent a letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra highlighting findings from a recent investigation into the late fee practices of the ten largest credit card issuers and urging the CFPB to finalize its proposed rule that would save American families up to $9 billion a year.

In February 2023, the CFPB proposed a new rule that would require credit card issuers to justify late fees in excess of $8, terminate automatic annual inflation adjustments to late fees, and cap late fees at 25% of the required minimum payment.  

“This proposed rule is necessary to protect American consumers from the predatory practices of greedy financial institutions and furthers the Biden Administration’s efforts to root out junk fees,” wrote Senator Warren. 

Following the CFPB’s announcement, Senator Warren sent a letter to ten of the largest credit card issuers – PNC, JPMorgan Chase, Capital One, Citigroup, Discover, Bank of America, American Express, Wells Fargo, US Bancorp, and USAA –  requesting information on their credit card late fee practices. In the responses, the credit card issuers revealed the weaknesses of their case against reining in excessive  late fees.

“The respondents repeatedly revealed their interest in maintaining exorbitant late fees as tools of punishment, arguing that late fees must be maintained at an ‘effective deterrent level’  and that ‘fees encourage timely payment’  while providing no evidence to suggest that excessive $41 fees are necessary to deter late payments,” wrote Senator Warren. “None of the issuers provided data we requested to substantiate their claims that the costs associated with collecting late payments exceeds the total late fees collected.” 

In the letter, Senator Warren offered support for the CFPB’s effort and urged Director Chopra to “finalize the proposed rule without making any changes that weaken it.”

  • In June 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, U.S. Senator Elizabeth Warren (D-Mass.) applauded the Consumer Financial Protection Bureau’s (CFPB) proposed rule to cap unreasonable credit card late fees, which could save working families billions of dollars each year.
  • In May 2023, Senator Warren, along with Senators Sherrod Brown (D-Ohio), Chair of the Senate Banking, Housing, and Urban Affairs Committee, Jack Reed (D-R.I.), Richard Blumenthal (D-Conn.), Tammy Baldwin (D-Wis.), Peter Welch (D-Vt.), and Bernie Sanders (I-Vt.), sent a letter to ten of the largest credit card issuers – PNC, JPMorgan Chase, Capital One, Citigroup, Discover, Bank of America, American Express, Wells Fargo, US Bancorp, and USAA –  requesting information on their credit card late fee practices following the Consumer Financial Protection Bureau’s (CFPB) proposed rule to limit exorbitant late fees and the banking lobby’s strong pushback against this proposed rule.
  • In February 2023, Senator Warren applauded the CFPB’s proposed rule to cut credit card late fees, saving Americans money as part of President Biden’s efforts to protect consumers.
  • On December 16, 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren asked Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra about the CFPB’s achievements over the last year to hold big banks and giant corporations accountable and put money back in working families’ pockets.

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