New CFPB Rule Slashes Credit Card Late Fees

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The Biden administration just dropped a new rule that going to make late fees on credit cards much cheaper.

So, here's the deal: the Consumer Financial Protection Bureau (CFPB) made a rule that slashes late fees from about 32 bucks down to a max of 8 bucks. They say this move will save credit card users about $14 billion a year, which breaks down to around $220 each for the 45 million people who usually get hit with these fees.

CFPB Director Rohit Chopra is pretty stoked about it, saying it's about time credit card companies stopped raking in huge bucks from these late fees. But here's the thing: this rule won't stop credit card companies from hiking up interest rates or reducing credit lines, and it's got some users ticked off. The U.S. Chamber of Commerce is even threatening to sue the CFPB over it.

This new rule applies to pretty much all big credit card companies, covering over 95% of the credit card balances out there. If companies do try to charge more than 8 bucks for a late payment, they need to prove they need that extra cash to cover their collection costs.

The rule kicks in about two months from now, so get ready for some cheaper late fees.

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WHY IS THIS IMPORTANT?

This new rule is a game-changer for businesses that use credit cards for day-to-day transactions. With late fees getting slashed, we could be looking at some serious savings on our credit card bills. It's not just about saving money though; this rule shake-up tells us something bigger is going on in the world of consumer protection and financial regulations. By keeping tabs on these changes, we can tweak our financial strategies to stay in the loop and make sure we're following all the new rules.

🔥 OUR HOT TAKE?

While slashing late fees sounds like a win for the little guy, it might not be all sunshine and rainbows.

It these companies try to sneak in more than 8 bucks for a late fee, they better have a good reason. Get ready for some cheaper late fees, but keep an eye out for what else might be coming down the pipeline.