CFPB Issues Final Rule Regarding Credit Card Penalty Fees

On March 5th, the Consumer Financial Protection Bureau (CFPB) issued its long-awaited final rule regarding credit card penalty fees.

The rule, which goes into effect 60 days following its publication in the Federal Register, does the following:

Large Card Issuers

A large card issuer is defined as an issuer with one million or more open credit card accounts. A large card issuer may charge:

• A late fee not to exceed $8
• The following penalty charges for violating the terms or other requirements of a credit card account -
• $32 for the initial violation
• $43 for a subsequent violation of the same type that occurs during the same billing cycle or in one of the next six billing cycles

Small Card Issuers

A small card issuer is defined as an issuer with fewer than one million open credit card accounts. A small card issuer may charge:

• Late fees and other penalty charges for violating the terms or other requirements of a credit card account that do not exceed -
• $32 for the initial violation
• $43 for a subsequent violation of the same type that occurs during the same billing cycle or in one of the next six billing cycles

The $32 and $43 amounts will be adjusted annually for inflation; however, the $8 maximum late fee charge for large card issuers will not change.

You can access a copy of the final rule here.