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Here’s why the CFPB is concerned about credit card late fees
By Justin Ho
The Consumer Financial Protection Bureau announced this week that it’s looking into the fees that credit card companies charge consumers for late payments — specifically, whether those late fees are “reasonable and proportional” to the amount people owe. The CFPB is looking at this now because credit card companies can change their late fees based on inflation, and given how high inflation has been lately, they have some concerns. The current rules governing credit card late fees date back to 2009. In the wake of the financial crisis, Congress was looking for ways to protect people from getting too deep into debt, said Karen Petrou at Federal Financial Analytics. “Credit cards became an area where consumer advocates were really focused,” she said. In 2010, the Federal Reserve put a $25 limit on late fees. But it also allowed credit card companies to adjust those fees annually, based on the consumer price index. Petrou said the thinking was that credit card companies should be able to account for inflation. “And if we fail to reflect it as a cost of doing business, then banks will not do that business. And if banks don’t do that business, consumers don’t get credit cards,” she said…