CLEAR Applauds CFPB’s Ban on Excessive Late Fees

This week, the Consumer Financial Protection Bureau (CFPB) unveiled a new rule to ban excessive credit card late fees. Such fees are a common source of frustration for credit card users, which make it more difficult for U.S. consumers and families to keep up with their bills and afford everyday necessities.

The new rule will reduce late fees from as high as $41 to no more than $8 for credit card issuers with over 1 million accounts, providing much-needed relief to millions of Americans who struggle with their credit card payments. The Bureau estimates the rule will save consumers $10 billion each year.

Reducing the burden of late fees will particularly help low-income consumers and those from financially marginalized populations, including communities of color, women, and LGBTQI+ people—who are disproportionately affected by such late fees.

According to one CFPB study, borrowers who made $150,000 a year paid an average of $15 when charged a late fee, compared to borrowers earning $32,000 who paid twice that amount, around $32.

In CLEAR’s 2021 report about the financial well-being of LGBT households, nearly a third of LGBT adults told the Federal Reserve that they carried a balance “most of the time” (32%) compared to only a fourth of non-LGBT adults (26%), and 15% percent said they could not afford all their bills that month 1.5x more often than non-LGBT adults (10%). Even greater proportions of LGBT adults who were Black (26%), Hispanic (24%), and women (24%) said that they could not afford all their bills that month.

CLEAR applauds this new rule to reduce the unnecessary junk fees and level the playing field for low-income and marginalized consumers so they can manage their finances and achieve greater well-being and financial security.