Bill Hulse
Vice President, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce


February 14, 2023


Americans benefit from a wide variety of credit cards from numerous financial services providers to find one that best suits their needs.

Americans also understand the requirement to pay their credit card bills on time, and 75% of credit card users do so. These responsible consumers have come to rely on low costs from their financial service provider and more choices in their banking.

However, the Consumer Financial Protection Bureau (CFPB) recently proposed a concerning new rule that would alter regulations for credit card late fees. The agency’s rule changes would mean higher costs for existing credit card users who pay their bills on time and fewer options for those looking for a new credit card.

The CFPB admits its proposed rule hurts those who pay on time

The CFPB’s proposed rule changes will punish responsible consumers who pay their credit card bills on time by forcing them to subsidize the costs of those who don’t. For its part, the agency admits as much by stating in its filing:

“Cardholders who never pay late will not benefit from the reduction in late fees and could pay more for their account if maintenance fees in their market segment rise in response - or if interest rates increase in response and these on-time cardholders carry a balance. Frequent late payers are likely to benefit monetarily from reduced late fees, even if higher interest rates or maintenance fees offset some of the benefits."

It gets worse. The CFPB’s proposal goes so far as to have the audacity to describe consumers who pay their credit card bills as “sophisticated,” and those who pay late as “naïve.” It is a curious choice of words given the Bureau flatly admits that its rule will reward those who pay late and punish those who pay on time. 

New rules mean less choice

In addition to higher costs, consumers should expect fewer credit card options and benefits given the red tape the CFPB’s rules would impose. Faced with rising costs and increased complexity, credit card issuers would have no choice but to curtail offerings. The upshot is that credit card users should expect fewer benefits than they do today – the CFPB’s rule will likely cause a reduction in popular perks such as cashback rewards, discounts on groceries and gas, and travel perks with airline and hotel partners.

Credit card users are well aware that they incur late fees if they don’t pay their bill on time. The Truth in Lending Act requires that borrowers receive written disclosures from credit card issuers about important terms of credit – including late fees – before they open the account.

Moreover, credit card issuers oftentimes provide disclosures and communications that are even more extensive than those required under the law because they want consumers to pay on time. Many credit card issuers even offer communications via email, text, and push notifications, as well as online and in-app banking capabilities that prominently display the consumer’s next payment due date. Issuers use these methods to maximize a consumer’s awareness of their payment due date and potential late fees.

If the Consumer Financial Protection Bureau wants to protect consumers, it shouldn’t raise costs on responsible consumers who pay on time. This could only disincentivize them to pay their bills. The proposed rule is harmful and misguided, and the agency should withdraw it at once.

About the authors

Bill Hulse

Bill Hulse

Vice President, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce

Hulse oversees the day-to-day efforts of CCMC including policy development, advocacy, and communications.

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