Business groups hit back at Biden administration's effort to cap credit card late fees

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The Biden management is seeking to enforce a caller limit connected nan emblematic in installments paper precocious fee, but nan user in installments and banking manufacture is informing nan alteration could yet effect different consumers successful nan shape of higher liking rates.

In a merchandise Tuesday, nan Consumer Financial Protection Bureau said a projected $8 headdress for a emblematic precocious interest would thief prevention consumers a cumulative $10 billion.

“For complete a decade, in installments paper giants person been exploiting a loophole to harvest billions of dollars successful junk fees from American consumers,” said CFPB Director Rohit Chopra. “Today’s norm ends nan era of large in installments paper companies hiding down nan excuse of ostentation erstwhile they hike fees connected borrowers and boost their ain bottommost lines.

President Joe Biden has made targeting "junk" fees a awesome attraction of his administration. Earlier Tuesday, he announced nan statement of a task force targeting unfair and forbidden pricing schemes.

But nan in installments paper manufacture and different financial associations are already hitting retired astatine nan CFPB's projected caller rule, saying it could lead to unintended consequences for consumers.

In a statement, Rob Nichols, nan president and CEO of nan American Bankers Association, called nan connection "flawed," arguing it could really consequence successful much precocious payments and yet little in installments scores. It could besides person a knock-on effect for paper users who do salary what they beryllium connected time, Nichols said.

"The Bureau’s misguided determination to headdress in installments paper precocious fees astatine a level acold beneath banks’ existent costs will unit paper issuers to trim in installments lines, tighten standards for caller accounts and raise APRs for each consumers — moreover those who salary connected time," Nichols said.

The Consumer Bankers Association, different waste and acquisition group, echoed those concerns.

“The rule’s argumentation goals are, astatine best, user redistribution, not user protection,” nan organization's president and main executive, Lindsey Johnson, said successful a statement.

Later Tuesday afternoon, nan U.S. Chamber of Commerce announced it was suing complete nan projected caller CFPB rule.

“Once again, nan Consumer Financial Protection Bureau has exceeded its authority," nan business group said successful a statement. The agency’s final credit card late interest norm punishes Americans who salary their credit card bills connected clip by forcing them to salary for those who don’t. This will consequence successful fewer card offerings and limit entree to affordable credit for galore consumers."

The projected norm only applies to ample in installments paper companies. Currently, in installments paper companies tin complaint arsenic overmuch arsenic $30 for a first precocious costs nether a rule enacted successful nan aftermath of nan 2008-2009 financial crisis.

The CFPB said it had reviewed marketplace information to get astatine nan caller $8 precocious interest it is proposing. As portion of nan caller rule, nan CFPB will nevertheless let banks to complaint a higher precocious interest nether a "show your work" provision.

The ABA’s Nichols said nan $8 level is "far below" banks’ existent costs of managing precocious fees, and that nan relation is apt to situation it.

"We will intimately reappraisal this last norm and see each options to conflict nan harmful user argumentation coming retired of Director Chopra’s CFPB," Nichols said, adding: "This norm should not beryllium allowed to spell into effect.”

Rob Wile

Rob Wile is simply a breaking business news newsman for NBC News Digital.