Credit-Card Late Fee Regulation
Following a very controversial proposal, the CFPB has finalized credit-card late-fee restrictions in a final rule that does not differ significantly from the proposal on its key point: elimination of the manner in which inflation adjustments are now made by credit-card lenders when it comes to late fees. The rule will sharply curtail issuer revenue related to these fees, likely affecting the market as a whole rather than the large issuers expressly covered by the new rule. Although the Bureau did not go as far as proposed in several areas, its core late-fee standard could lead lenders to raise interest rates, curtail rewards, reduce high-risk exposures, or otherwise redesign products with adverse implications for borrowers who meet their monthly-payment requirements in a timely fashion.