Target: Consumer Financial Protection Bureau
Goal: Don’t eliminate new credit card account fee limits.
In 2011, the Federal Reserve Board amended the Credit CARD Act to make it illegal for credit card companies to charge more than 25% of the total credit line before opening an account. This was in addition to the Act’s 25% fee limit during the first year of an account. The organization now responsible for maintaining and enforcing the Credit CARD Act is the relatively new Consumer Financial Protection Bureau.
The Bureau was birthed out of the Dodd-Frank Wall Street Reform and Consumer Protection Act in an attempt to consolidate and heighten government responsibilities to American consumers. The CFPB states as its mission: “To make markets for consumer financial products and services work for Americans–whether they are applying for a mortgage, choosing among credit cards, or using any number of other customer financial products.”
It’s a specifically vague mission. Make markets work for Americans? A dubious enterprise, considering American markets work by profiting from Americans. Nonetheless, in protecting the average consumer, there is absolutely zero rationale in allowing companies to charge uncapped, arbitrary processing fees.
The prime case cited for fee harvesting is that of First Premier Bank. In extending a $300 line of credit to a new customer, there are two obligatory fees: one, in the first year after the account is opened, of $75 (which falls under the Credit CARD Act’s 25% limit), and two, a $95 processing fee before the account is opened. Effectually, obtaining $300 of credit puts you $170 in the hole, with only $130 of actual credit to spend.
The Fed amendment of 2011 put a stop to the uncapped pre-account processing fees. Sign below to let the Consumer Financial Protection Bureau we do not want this amendment reversed.
Dear Consumer Financial Protection Bureau,
In a recent proposal to petition the public, the Bureau offered to cut the 25% fee limit on new accounts. This is an unacceptable proposition. In no way would revoking the fee limit help the American consumer. In fact, it seems to go forward with this reversal would be to attack the consumer, not protect them. What does the CFPB see in the benefit of passing such a law? Why has this rationale not been explained to the public?
We are writing to vote a vehement “No” on the proposal to eliminate new account fee limits.
[Your Name Here]