INDIANAPOLIS, Ind – A push is underway at the federal level to eliminate “excessive” credit card late fees.

The Consumer Financial Protection Bureau (CFPB) proposed a rule change to limit fees that are exploiting credit card customers, according to the bureau’s director.  

According to the CFPB, credit card late fees cost Americans about $12 billion per year.  CFPB director Rohit Chopra says that total should only be about a quarter of that total.  He says the late fees have become a core part of credit card companies’ profit model, and they disproportionately affect families living paycheck to paycheck.

“Over a decade ago, Congress banned excessive credit card late fees, but companies have exploited a regulatory loophole that has allowed them to escape scrutiny for charging an otherwise illegal junk fee,” Chopra said in a statement.  “Today’s proposed rule seeks to save families billions of dollars and ensure the credit card market is fair and competitive.”

If adopted, the rule change would bring late fees down from a possible $41 to a maximum of $8.  In addition, the rule would ban late fees that are more than 25% of a customer’s required payment.  

While the change could save customers money, several organizations are critical of the idea.  The U.S. Chamber of Commerce, for example, says lower fees would mean less incentive for people to pay their credit card bills on time.  Organizations like the Credit Union National Association and the American Bankers Association say It could hurt other customers by driving up costs for credit card companies, resulting in less available credit for lending.

The CFPB was seeking public comment on the proposal by April 3, which will be 30 days after publication in the federal registry.