My father always said, "Poor people are poor because they make poor decisions."
That line stuck with me. Not because I believed it, but because it helped frame the question, what really keeps people in poverty?
Then I got court-ordered to have a breathalyzer in my home. The system demanded I pay $99 every month to a private vendor to comply or else literally straight to jail.
That $35 fee wasn’t a slap on the wrist. It was a shove further into financial instability. And that’s when I realized poverty doesn’t just happen because of bad decisions. Poverty gets manufactured and monetized.
In Texas, THE SYSTEM doesn’t just punish you for doing wrong. It punishes you for being poor AND it lets private companies profit off your inability to keep up.
Late Fees: A $100 Billion Industry, Built on the Backs of the PoorLate fees are everywhere. In 2022, Americans paid over $14.5 billion in credit card late fees alone. Utility companies collected $561 million in late fees in a single year. Landlords routinely charge 10% to 12% of monthly rent as late penalties. If your water gets shut off for nonpayment, you're charged an additional reconnection fee just to access what should be a basic human need.
These fees aren’t scaled to income. They’re fixed. A $35 charge might be a mild inconvenience to someone earning six figures. To a family working hourly jobs or on disability, it means groceries, gas, or insulin. It means falling behind on the next bill to catch up on this one.
These fees do not improve outcomes. They extract wealth from those with the least to give.
And in Texas, the system that enables this goes beyond the private sector.
Where the State Looks Away
In April 2025, a Texas federal judge struck down a Consumer Financial Protection Bureau (CFPB) rule that would have capped credit card late fees at $8. The decision backed by major banking industry groups means credit card companies can continue charging $30 to $40 or more in late fees, regardless of a borrower's financial situation. This legal reversal keeps in place one of the largest and most regressive penalty systems in American finance, reinforcing how institutional decisions at the top continue to weigh most heavily on those at the bottom.
Municipalities and state agencies know these practices exist. Utility companies, many of which operate under public-private partnerships or regulated monopolies, regularly impose late and reconnection fees. And yet, while cities debate affordable housing or rental assistance, they remain silent about the millions quietly siphoned from residents through punitive penalties.
Housing authorities talk about eviction prevention, but permit 10% rent late fees to become standard. Courts mandate breathalyzers and probation conditions without checking whether the vendors charge fair fees or offer indigency plans. And while federal regulators debate limits on credit card late fees, Texans pay them anyway.
Credit card penalties are especially relentless. Missing a due date by even a few hours can mean a $30 to $40 fee, often followed by a penalty APR. For people revolving balances month to month, that single misstep can mean months of deeper debt. Nationwide, credit card late fees made up the largest share of penalty revenue, and many Texans, especially those without financial buffers, contribute disproportionately to that total.
This isn't oversight. It's selective blindness. The rules are enforced, but the methods of enforcement are ignored. And when the burden falls on the same low-income families, again and again, the silence becomes complicity.
The Psychological Cost of Financial Punishment
Behavioral economists call it "scarcity mindset." When you don’t have enough money, your brain shifts into survival mode. You tunnel in on the immediate crisis. Pay this bill, delay that one, juggle until something gives.
This mental strain reduces cognitive function, leading to more mistakes, missed deadlines, and short-term decisions that trigger even more fees. The system exploits this predictable human response.
Poor decisions don’t always cause poverty. But poverty-and the stress it brings-often causes poor decisions. And when every misstep is monetized, the result is a treadmill of financial punishment.
A Personal Example of a Structural Problem
HOA fees are another quiet offender in this pattern. They're not tied to essential services or utilities, yet they often mirror the same punitive practices. From community managers to corporate CEOs like Jamie Dimon, everyone seems to want the power to charge penalties, but no one wants the responsibility of understanding basic humanity or even the simplest economics. Penalties have become normalized, but their randomness across industries-from breathalyzers to HOA dues-highlights just how embedded this problem is.
I’m not writing this to avoid responsibility. I own my choices. But what I can’t accept is a system where a single late payment creates a chain reaction of penalties that keep people poor.
Ban late fees altogether or pilot a progressive, income-based penalty system. Even though compounding is an issue, the core problem is the initial flat fee that hits hardest when someone is already struggling. A one-size-fits-all model ignores economic reality. A progressive approach would scale penalties to what a person can actually afford, and could be tested locally before broader adoption. Cities and counties don’t need to wait on state leadership. Municipal action can make real change.
Closing: Toward a Fairer Model
My dad’s line, that "poor people are poor because they make poor decisions," was never the full story. The truth is:
Poverty deepens when decisions are punished disproportionately.
Late fees aren’t teaching lessons. They’re turning temporary hardship into permanent setback. And the people writing these policies know it. They just aren’t feeling it.
If Texas wants to be bold, it doesn’t need more government programs. It needs to stop letting public systems quietly authorize the worst parts of private profiteering.
The cost of being poor in Texas isn’t just felt at the register. It’s in the fees added when you stumble-and the silence that follows.
In April 2025, a Texas federal judge struck down a Consumer Financial Protection Bureau (CFPB) rule that would have capped credit card late fees at $8. The decision backed by major banking industry groups means credit card companies can continue charging $30 to $40 or more in late fees, regardless of a borrower's financial situation. This legal reversal keeps in place one of the largest and most regressive penalty systems in American finance, reinforcing how institutional decisions at the top continue to weigh most heavily on those at the bottom.
Municipalities and state agencies know these practices exist. Utility companies, many of which operate under public-private partnerships or regulated monopolies, regularly impose late and reconnection fees. And yet, while cities debate affordable housing or rental assistance, they remain silent about the millions quietly siphoned from residents through punitive penalties.
Housing authorities talk about eviction prevention, but permit 10% rent late fees to become standard. Courts mandate breathalyzers and probation conditions without checking whether the vendors charge fair fees or offer indigency plans. And while federal regulators debate limits on credit card late fees, Texans pay them anyway.
Credit card penalties are especially relentless. Missing a due date by even a few hours can mean a $30 to $40 fee, often followed by a penalty APR. For people revolving balances month to month, that single misstep can mean months of deeper debt. Nationwide, credit card late fees made up the largest share of penalty revenue, and many Texans, especially those without financial buffers, contribute disproportionately to that total.
This isn't oversight. It's selective blindness. The rules are enforced, but the methods of enforcement are ignored. And when the burden falls on the same low-income families, again and again, the silence becomes complicity.
The Economic Drain on Low-Income Texans
Texas has one of the highest poverty rates in the nation. According to the U.S. Census Bureau, approximately 14.2% of Texans live below the federal poverty line. That’s over 4 million people. Meanwhile, Texas households spent hundreds of millions annually in late fees in rent, in utilities, in credit, and in court-mandated programs.
If even a fraction of those fees were eliminated, Texans living on the margin could reclaim hundreds of dollars per year. For a household at the poverty line, an extra $300 to $500 annually can be the difference between staying housed or becoming homeless. It could reduce food insecurity. It could allow debt repayment. It could cover a month of medication.
In short, eliminating unnecessary fees wouldn’t just relieve pressure. It could meaningfully improve Texas’s poverty rate.
Texas has one of the highest poverty rates in the nation. According to the U.S. Census Bureau, approximately 14.2% of Texans live below the federal poverty line. That’s over 4 million people. Meanwhile, Texas households spent hundreds of millions annually in late fees in rent, in utilities, in credit, and in court-mandated programs.
If even a fraction of those fees were eliminated, Texans living on the margin could reclaim hundreds of dollars per year. For a household at the poverty line, an extra $300 to $500 annually can be the difference between staying housed or becoming homeless. It could reduce food insecurity. It could allow debt repayment. It could cover a month of medication.
In short, eliminating unnecessary fees wouldn’t just relieve pressure. It could meaningfully improve Texas’s poverty rate.
The Psychological Cost of Financial Punishment
Behavioral economists call it "scarcity mindset." When you don’t have enough money, your brain shifts into survival mode. You tunnel in on the immediate crisis. Pay this bill, delay that one, juggle until something gives.
This mental strain reduces cognitive function, leading to more mistakes, missed deadlines, and short-term decisions that trigger even more fees. The system exploits this predictable human response.
Poor decisions don’t always cause poverty. But poverty-and the stress it brings-often causes poor decisions. And when every misstep is monetized, the result is a treadmill of financial punishment.
A Personal Example of a Structural Problem
HOA fees are another quiet offender in this pattern. They're not tied to essential services or utilities, yet they often mirror the same punitive practices. From community managers to corporate CEOs like Jamie Dimon, everyone seems to want the power to charge penalties, but no one wants the responsibility of understanding basic humanity or even the simplest economics. Penalties have become normalized, but their randomness across industries-from breathalyzers to HOA dues-highlights just how embedded this problem is.
I’m not writing this to avoid responsibility. I own my choices. But what I can’t accept is a system where a single late payment creates a chain reaction of penalties that keep people poor.
The breathalyzer in my home wasn’t optional. But the fees attached to it? Those were business decisions. Someone decided that $35 for being one day late was acceptable. And the state let them. No hardship waiver. No sliding scale. Just "Pay up, or else."
This is how poverty works in Texas. It’s not just what you make. It’s what they take when you fall behind.
What Texas Must DoBan late fees altogether or pilot a progressive, income-based penalty system. Even though compounding is an issue, the core problem is the initial flat fee that hits hardest when someone is already struggling. A one-size-fits-all model ignores economic reality. A progressive approach would scale penalties to what a person can actually afford, and could be tested locally before broader adoption. Cities and counties don’t need to wait on state leadership. Municipal action can make real change.
The Potential Impact of Banning Predatory Late Fees in Texas
If Texas banned predatory late fees today, the financial outcome for low income residents could be transformative. Even a modest estimate of $500 per year in avoided fees, across credit cards, utilities, housing, and court mandated programs, adds up to $5,000 over a decade.
For families hovering at or below the poverty line, that savings could mean staying housed, getting out of debt, or finally affording stability. This isn’t just relief, it’s wealth building.
A basic simulation comparing a household under the current system with one no longer paying late fees shows that the latter could steadily accumulate savings over time. In contrast, the current system traps families in a cycle of zero or negative net gains.
This isn’t theoretical. It’s math. And it should be policy.
If Texas banned predatory late fees today, the financial outcome for low income residents could be transformative. Even a modest estimate of $500 per year in avoided fees, across credit cards, utilities, housing, and court mandated programs, adds up to $5,000 over a decade.
For families hovering at or below the poverty line, that savings could mean staying housed, getting out of debt, or finally affording stability. This isn’t just relief, it’s wealth building.
A basic simulation comparing a household under the current system with one no longer paying late fees shows that the latter could steadily accumulate savings over time. In contrast, the current system traps families in a cycle of zero or negative net gains.
This isn’t theoretical. It’s math. And it should be policy.
Closing: Toward a Fairer Model
My dad’s line, that "poor people are poor because they make poor decisions," was never the full story. The truth is:
Poverty deepens when decisions are punished disproportionately.
Late fees aren’t teaching lessons. They’re turning temporary hardship into permanent setback. And the people writing these policies know it. They just aren’t feeling it.
If Texas wants to be bold, it doesn’t need more government programs. It needs to stop letting public systems quietly authorize the worst parts of private profiteering.
The cost of being poor in Texas isn’t just felt at the register. It’s in the fees added when you stumble-and the silence that follows.