A Pennsylvania senator is introducing new legislation aimed at lowering credit card late fees. Sen. John Fetterman has introduced the Credit Card Fairness Act, which would cap credit card late fees at eight dollars.
The bill targets what Fetterman calls “predatory fees”, noting consumers pay an estimated $14 billion a year in late charges.
He says banks often charge more than forty dollars for a single late payment—far above the cost of collecting it. Senator Fetterman stated, “At a time when people are struggling to get by, these fees are only doing more harm.” The legislation would put into law a similar Consumer Financial Protection Bureau rule that’s currently stalled in court.
The current standard is thirty to forty-one dollars for the late fee, this is up to five times higher than what it costs the banks collecting the late payments.
The bill is backed by Democratic Senators Cory Booker of New Jersey and Tammy Baldwin of Wisconsin, along with several consumer advocacy groups.
“American consumers shouldn’t be hit with predatory late fees that are three to five times higher than the actual cost of collection,” said Senator Booker “This legislation keeps money in the pockets of working families by putting a clear cap on credit card late fees and cracking down on banks that make billions of dollars of profit each year on the backs of their customers.”
Additionally, Senator Baldwin said “As costs continue to skyrocket under this administration; from groceries, to housing, to health care Wisconsin families are already stretched thin. The last thing they need is big banks and credit card companies gouging them with credit card late fees that make it harder to stay afloat, let alone get ahead.”
The Credit Card Fairness Act is endorsed by groups such as Americans For Financial Reform, the Consumer Federation of America, Groundwork Collaborative, The National Consumer Law Center (for their low-income clients), Public Citizen, and Protect Browser.
Ericka Taylor, Co-Executive Director of Americans for Financial Reform says “This legislation would cap credit card late fees and make life a little more affordable.”