New CFPB rule caps banks’ credit card late fees at $8 (2024)

FAQs

New CFPB rule caps banks’ credit card late fees at $8? ›

Today's final rule: Lowers the immunity provision dollar amount for late fees to $8: Based on data analyzed by the CFPB, a late fee of $8 would be sufficient for larger card issuers, on average, to cover collection costs incurred as a result of late payments.

The CFPB announced a final rule that will cap credit card late fees at $8 for the largest credit card issuers, according to a March 5, 2024 release.

During this call, highlight that you're a good customer who routinely makes payments on time and that this was a one-off situation while being respectful of the rep and asking politely. The stronger your on-time payment history is, the more likely your credit card company will waive the late fee.

On March 5, 2024, the Consumer Financial Protection Bureau (CFPB) finalized a rule limiting the penalty for late payment to $8 per incident, down from an industry average of $32.

You can only get a late payment removed from your credit report if it was reported in error. To get an incorrect late payment removed from your credit report, you need to file a dispute with the credit bureau that issued the report containing the error.

The CFPB's final rule eliminates the automatic annual inflation adjustment for the $8 late fee threshold. This adjustment was added by the Federal Reserve Board and is not required by law. The CFPB will instead monitor market conditions and adjust the $8 late fee immunity threshold as necessary.

How much can I charge for late fees? A standard late fee for invoices that are overdue is between 1% and 2% monthly. Flat rate fees should depend on how much you typically charge customers. You can charge late invoice payments either as an interest rate, a flat fee, or both.

Credit card companies will usually waive your first late fee. Even if it's not your first time being late, you might be able to get it waived if you've paid on time for at least the past six to 12 months. Contact your card issuer to see if it will waive your late fee.

Many issuers will waive late fees as a courtesy to customers with good payment records. Call your issuer, explain the situation and ask a customer service representative if they can waive the fee. If you're also subject to a penalty APR, you can ask for its removal as well.

If there's an incorrect late payment on your credit reports, you can file a dispute with the creditor or the corresponding credit bureau to try and get the mark removed. But if the late payment is correct, you should know you probably won't be able to get rid of the derogatory mark before its time.

What is the most a business can charge for late fee? ›

Late fees must be explicitly described in credit card agreements, leases, or other types of contracts. Creditors cannot charge excessive late fees, which means they must be reasonable. Late fees typically range between $25 and $50.

Even a single late or missed payment may impact credit reports and credit scores. But the short answer is: late payments generally won't end up on your credit reports for at least 30 days after the date you miss the payment, although you may still incur late fees.

In CR's survey, the most common reason people said they were late with a payment was that they thought they'd already paid the bill (27 percent). For 12 percent, one of the problems was that they didn't know when the payment was due.

If you're having trouble making on-time payments, contact your credit card issuer as soon as possible. They might be able to work with you. In some cases, it may even waive late fees or penalty rates.

Neither you nor a credit repair company can remove accurately reported late payment information from your credit reports. But if you believe there might be an error, you can contact us to dispute incomplete or inaccurate information.

Since consumers can only obtain redress from the Civil Penalty Fund in cases where a civil money penalty is imposed, the CFPB may impose a nominal $1 civil money penalty.

(a) A charge that may be imposed for late payment of an installment due on a loan secured by a mortgage or a deed of trust on real property containing only a single-family, owner-occupied dwelling, shall not exceed either (1) the equivalent of 6 percent of the installment due that is applicable to payment of principal ...

A typical late charge provision in promissory notes for commercial loans provides that when a borrower fails to make a monthly payment the lender may collect both (a) a one-time late charge equal to some percentage of the missed payment, and (b) an increased rate of interest (referred to as “default interest”) on the ...