March 05, 2024

Scott on CFPB Credit Card Late Penalty Final Rule

Washington, D.C. – Today, Ranking Member Tim Scott (R-S.C.) issued the following statement after the Consumer Financial Protection Bureau (CFPB) published their final rule to limit credit card penalties. Ranking Member Scott stated he would use the Congressional Review Act process to fight the rule and its implementation.

“While lowering the cap on late penalties may sound like a good talking point, in practice it will decrease the availability of credit card products for those who need it most, raise rates for many borrowers who carry a balance but pay on time, and increase the likelihood of late payments across the board. Lawful and contractually agreed upon payment incentives promote financial discipline and responsibility. Ultimately, these commonsense practices protect consumers’ access to credit and enable a wider range of services. To continue delivering for those who need it most, I will be using the Congressional Review Act process to fight the implementation of this rule,” said Ranking Member Scott.


In April 2023, Ranking Member Scott led eight Republicans on the Senate Banking Committee in a letter to Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra criticizing the agency’s attempt to demonize commonsense incentives that promote financial responsibility while highlighting the harms the rule would have on the cost and availability of credit for American consumers.

At a June 2023 committee hearing, Ranking Member Scott admonished Director Chopra’s public pressure campaign that mislabels legitimate payment incentives as “junk fees” or “illegal fees,” noting that, “this sweeping initiative lumps legitimate, standard credit card late fees in with the White House’s political efforts to bring down fees in other sectors.”

Under the CFPB's credit card late fee rule, if a credit card issuer wants to charge a late fee higher than $8, they would have to demonstrate to the CFPB why the higher fee is justified. While this may sound reasonable in theory, the difficulties and costs associated with determining this amount on a case-by-case basis means the new $8 safe harbor amount will operate as a de facto cap.