The Biden-era cap was rescinded after big banks and the U.S. Chamber of Commerce objected to it
"Affordability" seems to be the byword in Washington political circles at the moment. Both parties are saying there's not enough of it going around, and they're presenting various proposals to patch things up.
In the latest attempt, three Democratic senators have introduced legislation to revive a Biden-era Consumer Financial Protection Bureau rule that would have lowered the cap on credit card late fees to $8.
The Credit Card Fairness Act by Sens. John Fetterman (D-Pa.), Cory Booker (D-N.J.) and Tammy Baldwin (D-Wisc.) would lower the safe harbor dollar amount for late fees to $8, limit future changes to inflation adjustments only and direct future challenges to the D.C. Circuit Court to avoid lawsuits being heard in ultra-right-wing 5th Circuit Court, according toa summary of the bill by the sponsors.
Challenged by banks
The late fee rule was originally implemented under Biden-eraCFPB Director Rohit Chopra but it was challenged by the American Bankers Association, the U.S. Chamber of Commerce and other business interests who claimed the bureau exceeded its statutory authority. The bureau last year reached an agreement with the bankers and the court to vacate the final rule.
"This is a win for consumers and common sense," the U.S. Chamber of Commerce said at the time. "If the CFPBs rule had gone into effect, it would have resulted in more late payments, lower credit scores, higher interest rates and reduced credit access for those who need it most. It would have also penalized the millions of Americans who pay their credit card bills on time and reduced important incentives for consumers to manage their finances."
Consumers currently pay $14 billion per year in credit card late fees, which the senators say pads the profits of the biggest banks. The standard $30 to $41 late fee is up to five times higher than the actual cost for banks of collecting late payments, allowing banks to profit from customers who are struggling to make ends meet. The Consumer Financial Protection Bureau previously enacted a rule that capped these fees at $8, which was stalled in litigation brought by the big banks. This legislation would codify the $8 cap in law.
Big banks profiteering off people by charging $41 for a single late credit card payment is absolutely wrong,said Fetterman. At a time when people are struggling to get by, these late fees are only doing more harm. This legislation will protect hardworking Americans from predatory fees, and Ill work with anyone to get this over the finish line.
Consumer groups' endorsement
The bill is endorsed by several consumer advocacy groups, includingAmericans for Financial Reform, the Consumer Federation of America, Groundwork Collaborative, the National Consumer Law Center (on behalf of its low-income clients), Public Citizen, and Protect Borrowers.
Excessive credit card late fees bulk up profits for big banks while eating into already strained household budgets,said Ericka Taylor, Co-Executive Director of Americans for Financial Reform. This legislation would cap credit card late fees and make life a little more affordable.
Penalty fees shouldnt be profit centers,said Adam Rust, Director of Financial Services for the Consumer Federation of America. Families shouldnt have to choose between paying an exorbitant late fee or meeting their basic needs. The Credit Card Fairness Act sets a reasonable cap on credit card late fees, restoring a standard of fairness and affordability to the cost of consumer credit.
Banks earn billions of dollars in profits from late fees on families struggling with unaffordable credit card debt. This bill will save over $200 a year on average for the more than 45 million people who are charged late fees,said Lauren Saunders, Associate Director and Director of Federal Advocacy at the National Consumer Law Center.
Posted: 2026-01-19 18:58:03
