On 2/2/2022, the CFPB released an article on the hidden cost of junk fees. The CFPB recently launched an initiative to save households billions of dollars a year by reducing exploitative junk fees charged by banks and financial companies.
According to the CFPB, junk fees drain tens of billions of dollars per year from Americans’ budgets. In the blog post, the CFPB enumerated some examples of common fees described in their request for information:
Late Fees. Late fees are penalties for not paying a bill by the due date, and can be major sources of revenue for companies.
Fees to Pay Your Bill. Sometimes called “convenience fees”, banks commonly charge fees to accept payments on bills, such as the ability to transfer payments, conduct a foreign transaction, or even pay bills online.
Prepaid card fees. For people who are unbanked, prepaid cards provide critical access to basic financial services but they often find additional and unadvertised fees for basic use of the card.
Closing costs and homebuying fees. Fees associated with closing on a home, such as document preparation or title insurance, can act as a significant barrier to families trying to buy a home or refinance and can significantly cut into household equity.
The CFPB is seeking information from stakeholders across the marketplace, including individuals, small business owners, academics, and government officials to help them understand how junk fees impact people’s financial lives.
The CFPB’s blog post can be found here.