ABA: Bank costs play crucial financial function

Fees charged by banks recuperate expenses, motivate sustainable monetary habits, support the budget-friendly prices of monetary services and follow sensible danger management, the American Bankers Association stated today in a declaration to the Senate Banking Committee. The committee held a hearing on costs charged by a number of markets—consisting of banks—for a range of functions. In its remarks, ABA pressed back versus allegations that bank costs total up to “junk fees” that hurt customers. It likewise prompted legislators to perform robust oversight of the CFPB’s project versus legal and revealed costs, such as its proposed rulemaking on charge card late costs and late payments.

ABA kept in mind that the CFPB late cost proposition will hurt customers and effect expense and access to credit.

“Limiting the ability of issuers to allocate the cost and risk of late payments to the late-paying population will force issuers to spread these costs across all consumer cardholders,” ABA stated. “Moreover, without an effective incentive to pay on time, late payments and associated costs will increase. As a result, the cost of credit will increase, credit availability will drop, and rewards and other credit card features will decline, and some may disappear.”

Credit cards are commonly popular monetary items that offer important customer advantages, ABA stated. “Unlike the bureau’s mischaracterization of late fees, consumers understand late fees and recognize the importance of late fees in promoting responsible consumer behavior and more efficiently allocating costs.”


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