2023 Tax Calendar
VIEWpoint Issue 2 | 2022
Inflation Reduction Act: Highlights of Key Changes for You and Yo...
The 2022 Gift Tax Return Deadline Is Coming Up Soon
HUD Strengthens the Effects Test
President Biden’s Proposed Budget Includes Notable Tax Provis...
In March 2022, the Consumer Financial Protection Bureau (CFPB) issued a 17-page report on the consumer impact from credit card late fees and financial institutions’ reliance on them. In 2019, the average late payment charge by major credit card issuers was $26. For each subsequent late fee within six billing cycles of an earlier late payment, the average fee rose to over $34. According to the CFPB, credit card late fees disproportionately burden consumers in low-income and majority-Black neighborhoods and are negatively correlated with indicators of upward economic mobility.
Late fees account for 99% of penalty fees and over half of the credit card market’s total consumer fees. They represent a larger share of charges for issuers primarily serving consumers with lower credit scores than for issuers that extend little to no credit to such consumers. Most smaller banks and credit unions charge a maximum late fee of $25 or less. In contrast, the largest credit card issuers charge at or near the higher fee amounts permitted by Regulation Z. The CFPB indicated a small but increasing percentage of companies charge no late fees or offer products with increased flexibility for late payments. In general, the CFPB believes the overall credit card market continues to rely on late fees disproportionately paid by economically vulnerable consumers.
Want to learn how to remain compliant regarding your institution’s late fees? Contact Doeren Mayhew’s regulatory compliance specialists.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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