A rule capping credit card late fees at $8 was scrapped by a federal judge earlier today, Tuesday, April 15, 2025 after the Consumer Financial Protection Bureau agreed with its opponents that the rule was illegal.
Rule Capping Credit Card Late Fees at $8 Scrapped by Federal Judge
Late fees were capped at eight dollars for issuers of credit cards with greater than one million open accounts unless they could prove that higher fees were necessary to cover their costs.
The rule was part of a crackdown on “junk fees” by Joseph Biden while he was president of the United States. Prior to the rule, the late fee was typically $32.00.
Mark Pittman — who is a federal judge in the United States District Court in the Northern District of Texas in Fort Worth and was appointed by Donald Trump, who is the current president of the United States — granted a joint request to scrap the rule by the Consumer Financial Protection Bureau and a coalition of six business and banking groups, which included the Chamber of Commerce of the United States and the American Bankers Association. Pittman agreed with both sides that the rule violated the Credit Card Accountability Responsibility and Disclosure Act of 2009 because it prohibited issuers of credit cards from charging fees that were “reasonable and proportional to violations.”
The aforementioned business and banking groups accused the Consumer Financial Protection Bureau in a lawsuit in March of 2024 of overstepping its authority with the rule and ignoring the intent of the House of Representatives that credit card fees be high enough to deter late payments and compensate the issuers of credit cards for their costs. They also claimed that the rule was unfair to many consumers because the rule would force issuers of credit cards to pass on the costs to cardholders who pay their bills on time.
Final Boarding Call
Many people who write about travel try to sell you on signing up for credit cards. There is nothing wrong with that…
…but know that if you sign up for a credit card and are late with a payment, you will likely be charged a fee of $32.00 as a result.
If you are charged a late fee when your payment happens to be late once and you usually pay your credit card balance in a timely manner, contact the company that issued your credit card, as they will likely rescind the fee as a goodwill gesture…
…but if holders of credit cards have a habit of being late, they should pay the fees and penalties. Why should the issuer of a credit card be required to pay the costs of what essentially is loaning the money to delinquent and irresponsible holders of their credit card when merchants are paid on time?
Even worse, why should responsible people like me who pay their bills in a timely manner pay the costs for many irresponsible people who do not take their debts seriously?
Never allow yourself to get into debt with credit cards — no matter how good a deal may seem. Know that many of the credit card deals that are sold by writers about travel usually charge an annual fee and require a minimum spend during a certain period of time — such as spending $5,000.00 within three months of opening the credit card to earn 100,000 points worth $1,000.00 as a generic example…
…and if you cannot afford it, do not try to take advantage of the deal. You will likely wind up significantly worse off — even if you secure the bonus that is offered with the credit card…
Photograph ©2023 by Brian Cohen.
