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The Consumer Financial Protection Bureau finalized a rule that caps late fees on most credit cards. Under the new rule, credit card companies with more than one million accounts can only charge an $8 fee for late payments.
The new rule covers roughly 95% of credit card holders who have an outstanding balance.
The CFPB estimates that the rule will save consumers $10 billion a year by cutting the price of the late fees, which currently average $32.
"For over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers," CFPB Director Rohit Chopra said in a statement announcing the new rule. "Today's rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines."
Credit card debt in America is at a record high of $1.13 trillion, with an average balance of $7,932 as of the end of 2023.