On April 17, the Consumer Financial Protection Bureau (CFPB or Bureau) released a new blog post, highlighting its current efforts in the credit card market. According to the post, interest rates on credit cards have risen substantially, with average rates over 20%. Implying that high interest rates are solely a result of lack of competition, the CFPB has: (i) published a proposed rule that would amend Regulation Z to decrease the safe harbor for credit card late fees; (ii) launched an update of its credit card database; (iii) and requested public feedback on how the consumer credit card market is functioning. The CFPB does not mention the fact that the Prime Rate has increased more than credit card rates in the last two years.
As discussed here, on February 1, the Bureau proposed a rule that would amend Regulation Z to: 1) decrease the safe harbor for credit card late fees to $8 and eliminate altogether a higher safe harbor amount for subsequent late payments; 2) eliminate the annual inflation adjustments for the late fee safe harbor amount; and 3) mandate that late fees must not exceed 25% of the required minimum payment. Interested parties may submit comments on the proposed rule until May 3, 2023.
Last month, the CFPB announced updates to its credit card database. According to the Bureau, the updates are intended to create a neutral data source that can facilitate comparison shopping for those looking to refinance their credit card debt. The neutral data source will display dominant credit card issuers average interest rates next to small banks and credit unions’ rates.
Also discussed here, the CFPB is currently seeking public comment on how the consumer credit market is functioning as part of its biennial review required by the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). The CFPB accepted comments until April 24.