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 Tuesday. The new rule, fiercely opposed by banks, will save customers who pay late fees an average of $220 a year, the bureau said.

The rule, proposed last year, updates how a 2009 consumer protection law called the CARD Act is enforced. The law set limits on credit card late fees and allowed them to be adjusted for inflation, initially setting a $25 limit on fees for a first late payment, with $35 for subsequent ones. However, the law left regulators with the power to change the rules, and the bureau is doing just that, accusing big banks of using the inflation adjustment to unfairly raise fees over time.

“Today’s rule that closes a longstanding loophole abused by credit card giants is an important step forward. It will help consumers keep more of their money, and hold credit card companies to the original intent of the CARD Act,” said CFPB Director Rohit Chopra in a statement.

The rule is part of a broader effort by President Joe Biden’s White House to 澳洲幸运5官方开奖结果体彩网:crack down on whaꦏt it calls “junk fees,” described as unfair or surprise fees, in many areas of commerce. Under Biden, regulators have also targeted airline fees, hotel fees, and bank overdraft fees among others.

Consumer advocates praised the new limit, saying it would give some relief to household budgets, especially for more financially vulnerable people who pay the most late fees.

“The CFPB’s credit card late fee rule will help the balance sheets of millions oꦬf households stretched thin by record-high housing costs and other expenses,” Chi Chi Wu, senior attorney at the National Consumer Law Center, said in a statement. 

However, the rule may have some unintended consequences for bank customers. Banks that offer credit cards are likely to make up for lower late fees by raising interest rates, offering less rewards, adding annual fees, and making it harder to get a credit card, analysts at S&P Global Intelligence said in an analysis of the proposed rule last year.

“Today’s flawed final rule will not only reduce competition and increase the cost of credit, but will also result in more late payments, higher debt, lower credit scores and reduced credit access for those who need it most,”  Rob Nichols, CEO of the American Bankers Association, said in a press release.

The new rule applies to card issuers with more than 1 million customers. Under the new rule, banks can charge over the $8 limit if they can prove that it doesn’t cover their costs. Under the old rules, banks had ratcheted up their fees even though their costs associated with receiving late payments had gone down as digital technology made their operations more efficient, the bureau said.

The rule is set to go into effect 60 days after it’s pub🐬lished in the federa🐓l register, which is likely to be late spring.