Many business groups are pushing back against recent measures aimed to cap late fees on credit cards. These groups argue such caps could potentially harm their businesses and restrict consumer access to credit products. They believe these costs help to cover the risks taken on by the lending banks and defray administrative costs.
These groups also argue that caps might force changes in their business models that could lead to higher interest rates or stricter criteria for creditworthiness, which might exclude potential clients who cannot meet the rigorous standards. They maintain a balance needs to be struck between protecting consumers from excessive late fees and ensuring businesses can still provide these credit products to their customers.
Consumer protection advocates, on the other hand, argue that current late fees can be overly punitive and are disproportionately burdening those who are least able to pay. They assert that capping these fees can help protect the financial wellbeing of consumers, particularly those in vulnerable circumstances.
As a response these competing arguments, policymakers will need to consider carefully how best to craft legislation that protects consumers while also maintaining the viability of businesses providing credit products.
Business groups hit back at efforts to cap credit card late fees
Many business groups are pushing back against recent measures aimed to cap late fees on credit cards. These groups argue such caps could potentially harm their businesses and restrict consumer access to credit products. They believe these costs help to cover the risks taken on by the lending banks and defray administrative costs.
These groups also argue that caps might force changes in their business models that could lead to higher interest rates or stricter criteria for creditworthiness, which might exclude potential clients who cannot meet the rigorous standards. They maintain a balance needs to be struck between protecting consumers from excessive late fees and ensuring businesses can still provide these credit products to their customers.
Consumer protection advocates, on the other hand, argue that current late fees can be overly punitive and are disproportionately burdening those who are least able to pay. They assert that capping these fees can help protect the financial wellbeing of consumers, particularly those in vulnerable circumstances.
As a response these competing arguments, policymakers will need to consider carefully how best to craft legislation that protects consumers while also maintaining the viability of businesses providing credit products.
