Feds cap credit card late fees at $8

What happened?

The Consumer Financial Protection Bureau (CFPB) finalized a rule Tuesday that will cap credit card late fees at $8 a month, from the current average of $32, saving households an estimated $10 billion a year.

Who said what?

"Big credit card companies" have been "hiding behind the excuse of inflation" to "harvest billions of dollars in junk fees" from consumers, said CFPB director Rohit Chopra. This rule will "stop some credit card companies from ripping you off," President Joe Biden said. Sen. Tim Scott (R-S.C.) said it will limit "credit card products for those who need it most."

The commentary

The Biden administration is "messaging this rule as a 'win' for consumers going into an election year," but "it's anything but," said Lindsey Johnson at the Consumer Bankers Association. "On the surface, this is undoubtedly a good thing for credit cardholders," Matt Schulz, chief credit analyst at LendingTree, said to NPR. But banks will likely "raise other types of fees to make up for the lost revenue."

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What next?

The rule will go into effect in about 60 days. Banking groups said they will sue to block it.