Several Republican Senators are attempting to block the Consumer Financial Protection Bureau’s new rule restricting credit card feed. In a press release, the Republican Senate minority detailed their resolution that seeks to overrule the CFPB’s new policy.
The CFPB’s new rule on credit card fees
The agency rule was finalized and announced to the public in early March. The CFPB says that the rule is a solution to allegedly “excessive” late fees charged by many credit card providers. According to the agency, the new rule would limit the amount companies can charge as fees for late payments.
The bureau claims its new rule would reduce the average late fee charge by 75% – to roughly $8 per charge. Notably, the CFPB alleged that the credit card companies were using “loopholes” to get around provisions of existing law. Specifically, the agency cited the Credit Card Accountability Responsibility and Disclosure Act of 2009’s protections against excessive penalty fees .
Opponents argue that the rule would be harmful to consumers
However, the agency’s argument has not gone unchallenged. For more than a year, Senate Banking Committee Ranking Member Tim Scott (R-S.C.) has warned that he would oppose the rule. In doing so, he’s cited concerns about how the new rule could impact consumer access to credit. He and other critics have also noted the potential for increased costs for banking services.
In addition, those critics have suggested that the arbitrary cap on fees could result in increased rates for other borrowers. If banks see fees forcibly restricted in one area of their service, they may be forced to pass those costs on to other customers.
The minority Senate resolution has reportedly been backed by an array of banking and business organizations, including. A list of those organizations and the resolution’s Senate sponsors can be found in the press release: Scott Works to Overturn CFPB’s Credit Card Fee Rule.
