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March 5, 2024

New CFPB Rule Will Save Consumers Billions of Dollars a Year From Credit Card Companies Charging Exorbitant Predatory Penalty Fees

WASHINGTON, D.C.— Dennis Kelleher, Co-founder, President, and CEO, issued the following statement on the Consumer Financial Protection Bureau’s (CFPB) adoption of new rules to reduce credit card penalty fees:

“As required by law, today’s action by the CFPB will save more than 45 million consumers more than $10 billion by eliminating a loophole created by the Federal Reserve.  Financial companies overcharge hardworking Americans tens if not hundreds of billions of dollars a year in unnecessary and baseless fees and other charges, most unrelated to the actual cost of providing the so-called ‘service’ and with no real basis other than increasing the companies’ revenues, profits, and bonuses. Indefensibly exorbitant bank overdraft fees are a good example of that, as are credit card penalty fees which currently enrich credit card companies by about $14 billion a year.

“The CFPB’s rule adopted today will dramatically limit those predatory credit card penalty fees by, in part, requiring that the fee actually reflect the cost incurred by the company. These fees, which averaged $32 in 2022, take a crippling toll on consumers, many of whom simply cannot afford the unreasonable costs. While those amounts may seem small to some people, they represent a real financial hardship to the countless Americans struggling to make ends meet.

“The CFPB’s actions will dramatically reduce the amount of money companies can extract from consumers’ pockets from the current maximum fee of $41 to a new, drastically reduced maximum of $8. The new rule will also allow companies to charge above this $8 maximum in some instances, but only if they can prove the higher fee is actually necessary to cover their incurred collection costs.  The rule will also eliminate the annual inflation adjustments for the safe harbor amounts since inflation does not accurately reflect changes in the actual costs of collection. The CFPB estimates that the new rule will save American families more than $10 billion in late fees annually, translating to an average savings of $220 per year for the more than 45 million people who are charged late fees.

“The CFPB’s action implements a 2009 Congressional mandate that these fees be reasonable and proportional to the cardholders’ late payments or other omissions, the costs incurred by the card issuer from such omissions, and the amounts appropriate for deterring future lapses by the cardholder.  The CFPB’s action was necessitated by the Federal Reserve’s action more than ten years ago when it established a safe harbor for credit card fees that essentially relied on the industry’s customary charges. However, those charges were not based on the actual costs and deterrence considerations as required by the law, but on other impermissible factors, including the credit card companies’ desire to maintain or increase overall revenue. The CFPB’s actions today finally implement the law as Congress intended.”

You can read our comment letter on the rule here.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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