A new federal rule capping credit card late fees at $8 for first-time offenses has survived legal challenges and is now in effect. The regulation, issued by the Consumer Financial Protection Bureau, represents a significant reduction from the previous average late fee of $32.
Credit card issuers are adjusting their business models in response, with some raising annual fees or tightening credit limits to offset the lost penalty revenue. Consumer advocates argue the previous fee levels were disproportionate to the actual cost incurred by lenders.
Cardholders are encouraged to set up automatic minimum payments to avoid late fees entirely, regardless of the new cap amount.
