President, CEO, Advisor @ CCG Catalyst | Banking & Fintech Expertise & Bankers Fintech Council
Learn about the proposed rule to cap overdraft fees and how it could affect consumers and banks alike. Explore the arguments from both sides and the potential impact on access to short-term liquidity. #BankingFees #CCGCatalyst #BankingResearch What’s Happening in the War on Fees: Tyler Brown
On February 16, 2024, the Consumer Financial Protection Bureau (CFPB) reported on the first set of results from the newly updated Terms of Credit Card Plans survey which revealed that large banks are offering worse credit card terms and interest rates than credit unions and small banks, regardless of credit risk. The survey found that the average cardholder could save $400 to $500 in annual interest at a credit union or small bank since the 25 largest credit card issuers charge customers interest rates that are 8 to 10 points higher. Want to learn more? Visit https://ow.ly/QCEt50QKZCV.
Check out my op-ed on pages 5 and 38 of the March 2024 edition of American Banker describing how the CFPB's rulemaking on personal financial data rights (Section 1033) presents an opportunity for banks as well as a compliance exercise. We must not fall into the trap that banks are always data providers; they can also obtain consumer consent to function as data recipients. While we await the issuance of the final rule, banks should evaluate possible use cases for operating in this capacity.
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The Consumer Financial Protection Bureau found that large banks charge higher credit card interest rates than small banks and credit unions. The median interest rate for people with good credit - a credit score between 620 and 719 – was 28.20% for large issuers and 18.15% for small issuers, according to Consumer Financial Protection Bureau So, if someone charges $1,000 and pays $100 a month for a year, at 28.2% they would pay $125 in interest. At 18.15% they would pay $75 in interest.
Banks have become highly profitable partly due to high overdraft fees. This is a clear market failure arising from information asymmetry. The Consumer Financial Protection Bureau has proposed rules that would stop this predatory practice. These new rules would require banks to justify their overdraft fees on the basis on the bank's incremental costs, or it would limit the fees to between $3 and $14. INET's new article explains why this market intervention is warranted, will protect vulnerable consumers, improve competition, and shouldn't lead to banks raising costs in other areas to compensate for lost revenue. Read the article here: https://bit.ly/3xIWUtO
Instant Payments Maven | International Speaker | Driving Instant Payments Adoption | Business Clarity | Implementation Confidence | Stakeholder Support
The CFPB’s recent rule capping late fees for credit card issuers is a significant move toward consumer protection. I agree with Tony DeSanctis comments It's a balancing act. While limiting late fees benefits consumers, it is also a challenge for financial institutions from the unrealistic turn around time, to compensation from taking on the additional risk associated with late payments. And, this has unintended financial inclusion consequences, as this could lead to lower approvals, and maybe even credit card closures for those customers that have a hard time staying on top of payments. What are your thoughts on this rule? also thoughts on how to ensure financial inclusion while still managing risk? #financialinclusion #riskmitigation #cfpb
Consumer Financial Protection Bureau just finalized a rule capping the maximum late fee for card issuers with over 1mm accounts to $8. Let’s talk about it! 💳 The $8 will not adjust with inflation but will be evaluated by the CFPB periodically for possible adjustment 💳 If banks want to charge more than $8 they will have to ‘show the math’ of actual collection costs to justify a higher fee 💳 New rule takes effect in 60 days So What? Three things jump out to me on this 1. Implementation in 60 days is near impossible 2. This will impact all late fees regardless of size because smaller issuers will have to reduce fees to be competitive 3. People with lower or no credit will be excluded from credit cards because the loss risk will outweigh the benefit without the ability to charge adequate late fees. What do you think? Brandi Gregory Kevin Von Holten Lindsay Hooks Emily Osburn Jessica Pinkston Ron Shevlin Sam Kilmer Mary Wisniewski
Tony has outlined some things to consider with the new CFPB rule to cap late fees. While it might be for FIs of $10B and above, we have to consider how to stay competitive. Let me know your thoughts on the new ruling.
Consumer Financial Protection Bureau just finalized a rule capping the maximum late fee for card issuers with over 1mm accounts to $8. Let’s talk about it! 💳 The $8 will not adjust with inflation but will be evaluated by the CFPB periodically for possible adjustment 💳 If banks want to charge more than $8 they will have to ‘show the math’ of actual collection costs to justify a higher fee 💳 New rule takes effect in 60 days So What? Three things jump out to me on this 1. Implementation in 60 days is near impossible 2. This will impact all late fees regardless of size because smaller issuers will have to reduce fees to be competitive 3. People with lower or no credit will be excluded from credit cards because the loss risk will outweigh the benefit without the ability to charge adequate late fees. What do you think? Brandi Gregory Kevin Von Holten Lindsay Hooks Emily Osburn Jessica Pinkston Ron Shevlin Sam Kilmer Mary Wisniewski
Three things come to mind with CFPB finalising the rule for credit card late fees capping - This would perhaps now make access to credit even more difficult for people struggling with personal finances or low credit scores. Large lenders would argue against issuing cards as the risk would outweigh the rewards ( amount of late fees chargeable) - How would banks now fill a possible $10B hole in their P&L ? Would this lead to an increase in APR , if so would that push down demand for credit ? - This needs to be implemented in 60 days, which seems like a very quick turnaround for banks to implement this cap on all credit card related systems. How efficient would this execution be ? #Caponlatefees #creditcardissuers
Consumer Financial Protection Bureau just finalized a rule capping the maximum late fee for card issuers with over 1mm accounts to $8. Let’s talk about it! 💳 The $8 will not adjust with inflation but will be evaluated by the CFPB periodically for possible adjustment 💳 If banks want to charge more than $8 they will have to ‘show the math’ of actual collection costs to justify a higher fee 💳 New rule takes effect in 60 days So What? Three things jump out to me on this 1. Implementation in 60 days is near impossible 2. This will impact all late fees regardless of size because smaller issuers will have to reduce fees to be competitive 3. People with lower or no credit will be excluded from credit cards because the loss risk will outweigh the benefit without the ability to charge adequate late fees. What do you think? Brandi Gregory Kevin Von Holten Lindsay Hooks Emily Osburn Jessica Pinkston Ron Shevlin Sam Kilmer Mary Wisniewski
Late credit card payment fees are about to get a lot cheaper. The Consumer Financial Protection Bureau (CFPB) finalized rules that set an $8 maximum on credit card late fees, down from the typical $32 charge, the bureau said today. The new rule, fiercely opposed by banks, will save customers who pay late fees an average of $220 a year, accordung to the bureau. Learn more here: https://lnkd.in/eHtjXTZM
For too long, banks have been gouging their customers with #overdraft fees that fall through the gaps in current laws governing credit. It has become a major profit generator for the banks, representing billions of dollars a year in revenue, and it comes at the expense of customers with no real power to push back. The Consumer Financial Protection Bureau's new proposal is a major step toward updating the rules and putting a stop to these unfair practices, saving consumers an estimated $3.5 billion or more in fees every year. Learn more here: https://lnkd.in/eKda--57
