Consumer Alert: The CFPB is considering cutting credit card late fees by 75 percent
One in five of us has had to pay a credit card late fee sometime during the last year. But the Consumer Financial Protection Bureau says you were charged too much, and it’s proposing cutting those fees by about 75 percent.
This could be a difference-maker for a lot of people. Consumer Reports published a story about this issue today. The writer tells us about a man in Poughkeepsie who had a $35 balance on his bill, but got $123 in late fees. Poor guy was in the hospital for three months, and the credit card company charged him a late fee of $41 a month.
It’s because of cases just like this that the White House is cracking down on junk fees.
The Consumer Financial Protection Bureau is proposing a lot of changes. For example, banks would have to notify you a few days before your payment is due and provide a 15-day grace period before charging a late fee. The CFPB says the average late fee is $30 and subsequent late fees are $41. The CFPB is proposing cutting that fee by about 75 percent to $8.
Consumer Reports just completed a survey finding 20 percent of consumers have had a late fee in the last year. And they had a number of reasons for doing so.
“About a quarter of them said ‘I thought I paid the bill,’” said Lisa Gill, an investigative reporter for Consumer Reports. ”But many people report saying ‘I had to prioritize other debt. I had to prioritize paying for other essentials.’ About 9 percent said ‘I just simply didn’t have the money.’”
until that rule goes into effect, with the help of Consumer Reports, Here’s Deanna’s Do List for Avoiding Late Fees.
- Sign up for reminders by text or email.
- Ditch snail mail and pay digitally or by phone.
- If you can, sign up for auto pay for at least the minimum. I realize not everyone can do that because you’re juggling.
- If you can’t pay, call the credit card issuer before the bill is due and ask for a payment pause. Often it will allow you to skip that monthly payment and waive the late fee.
- Sign up for alerts when the payments are posted.
And there’s always this option. Switch to a card that doesn’t charge late fees. Citi Simplicity, the Petal 2 Cash Back card and the Apple Card are three that Consumer Reports referenced in its investigation.