A federal judge in Texas has struck down a rule that would have limited credit card late fees to just $8. The rule was created by the Consumer Financial Protection Bureau (CFPB) under President Joe Biden’s administration as part of a push to reduce so-called “junk fees.”
On Tuesday, U.S. District Judge Mark Pittman canceled the rule after both the CFPB and several major business groups, including the U.S. Chamber of Commerce and the American Bankers Association, agreed it went against the law.
The judge ruled that the rule violated a 2009 law that says credit card fees must be “reasonable and proportional” to the customer’s late payment.
The now-overturned rule would have applied only to credit card companies with over one million active accounts—unless they could prove they needed higher fees to cover their costs. Most late fees today average around $32.
Business groups had sued in March 2024, saying the rule gave the CFPB too much power. They also argued it could end up hurting customers who pay on time, because banks might raise other fees to cover their losses.
In a joint statement, the groups called the judge’s decision “a win for consumers and common sense.”
The Trump administration has been working to roll back several Biden-era policies it says are bad for business. A recent court decision also gave the administration power to reduce the size of the CFPB, though not eliminate it completely.
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