Credit card users paid nearly $164 billion in fees, interest in 2022. It may ‘get a little worse,’ analyst warns

The Biden administration has focused on cracking down on “junk fees” with the Federal Trade Commission and the CFPB in all areas of consumers’ lives, including certain credit card penalties.

Some credit card companies charge as much as $41 for a missed payment. The goal is to reduce late payment fees to $8, ban late fee amounts that go over 25% of the cardholder’s required payment and end the automatic annual inflation adjustment, the CFPB said in a statement.

These charges are significant for lower-income households that may these fees constantly, amounting to almost a few hundred dollars in the course of a year, said Schulz.

Proposed changes are meant to fill gaps in the Credit Card Accountability Responsibility and Disclosure Act of 2009, or CARD Act. The law imposed guardrails on credit card companies, like price controls on penalty fees and specific conditions in which they can be charged. However, there is no restriction on how much APR a company can charge nor language on late fees.

For instance, more than 3 in every 4 cardholders who asked for a lower interest rate on one of their credit cards in the past year got one, according to LendingTree. Almost 90% of people who called their issuer about a late fee were able to get it waived, a 2022 WalletHub survey found.

If you ask your card issuer to lower your interest rate, they may run a credit check to see if anything has changed with your financial situation since you opened the card. However, the savings you may get with the lower rate may be worth taking the “little hit on your credit score,” said Schulz.

Consider setting up automated payments for your credit card statements so that you don’t miss a payment or accidentally pay late.

However, don’t lose sight of your monthly statements because “autopay isn’t perfect,” said Schulz.

You could still end up paying late if you don’t monitor the due date, and you may not be paying enough to cover the minimum if your balance is higher than expected. To avoid paying more in interest and fees, try to make sure you cover the entire statement balance.

“Autopay makes a lot of things easier but it doesn’t absolve people of the responsibility for still keeping an eye on things,” added Schulz.

You can also ask to change your due date to make if more convenient, said Sara Rathner, credit cards expert and writer at NerdWallet. You’re aware of how much money you have available in your checking account this way before an automated payment goes through.

Take advantage of opportunities to mitigate surprise charges and get the information you need about your card, said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners in Irvine, California.