Late Fees: A Regulatory Hot Button, Not a Junk Fee

On Oct. 11, 2023, the White House put out an announcement: “Broad Actions to Protect Consumers From Billions in Junk Fees.” The effort affects a wide range of consumer purchasing, from banking to travel. As it relates to credit cards, the focus is on late fees. The news release announced that fees charged in the back end of the buying process can cause consumers to pay “upward of twenty percent or more.”

It is interesting to note the White House’s definition of a junk fee: “Junk fees are hidden, surprise fees that companies sneak onto customer bills, increasing costs and stifling competition in industries across the economy.” This definition does not adequately describe a late fee. Consumers may not like to pay late fees, but when the fees exist, credit card issuers comply with disclosure mandates.