The CFPB Moves to Dismiss Its Proposed $8 Cap on Credit Card Late Fees

A rule that would have drastically reduced how much a credit card issuer can collect when cardholders miss payment due dates appears to be off the table. 

On April 14, the Consumer Financial Protection Bureau (CFPB) reached an agreement with plaintiffs, including the U.S. Chamber of Commerce and the American Bankers Association, to end a lawsuit the plaintiffs had launched to stop the credit card late fee cap in its tracks.

Credit card issuers likely breathed a collective sigh of relief upon learning that the CFPB is no longer pursuing the cap on card late fees.

The bureau sought to enact a cap that would limit late fee amounts to $8, which is a steep discount from what current regulations allow issuers to charge when cardholders are delinquent in making payments on or before their due date.

According to the Consumer Financial Protection Bureau, the current rule that applies to card late fees “sets forth a safe harbor of $30 generally for penalty fees, except that it sets forth a safe harbor of $41 for each subsequent violation of the same type that occurs during the same billing cycle or in one of the next six billing cycles.”

The proposed cap was intended to apply only to large credit card issuers, which the CFPB defines as those that, in combination with their affiliates, have at least 1 million open credit card accounts. But the financial losses at those institutions would have been substantial had the cap been implemented.

A report in the American Banker revealed that the end of the lawsuit and elimination of the proposed rule will save an estimated $10 billion per year for the credit card industry.

The Consumer Financial Protection Bureau’s move to eliminate its proposed rule comes at a time when the bureau’s future is in question. The CFPB was created in response to the 2008 financial crisis.

President Donald Trump and his administration have voiced their disapproval of the CFPB and its mission, resulting in layoffs and changes in leadership at the bureau in 2025

On April 11, a federal appeals court moved to roll back portions of an injunction that had prevented large-scale firings at the Consumer Financial Protection Bureau. The effort to vacate the bureau’s credit card late fee cap is sure to please the CFPB’s critics, who claim the group lacks accountability.

But the proposed credit card late fee cap wasn’t officially dead when the CFPB reached its agreement with the case’s plaintiffs. The bureau requested U.S. District Judge Mark Pittman in Forth Worth, Texas to enter a final order that would terminate the cap rule. 

The judge took steps to block the late fee cap in 2024, saying it stood in opposition to the Credit Card Accountability and Disclosure Act of 2009, which protects consumers from unfair lending practices. And on the afternoon of April 15, Pittman dismissed the CFPB’s proposal to reduce late fees.

Mark Paoletta is the Consumer Financial Protection Bureau’s Chief Legal Officer. Per the American Banker, Paoletta also cited the Credit Card Accountability and Disclosure Act of 2009, known as the CARD Act, in court filings.

Multiple parties said the proposed late fee cap violated the CARD Act.

“The parties agree that, in the Late Fee Rule, the Bureau violated the CARD Act by failing to allow card issuers to ‘charge penalty fees reasonable and proportional to violations’ as set out by the Court,” Paoletta wrote in a motion.

In a post on its website, the American Bankers Association and other plaintiffs are calling the CFPB’s move to end the late fee proposal a victory for common sense and consumers.

“If the CFPB’s 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,” the plaintiffs said in a joint statement. 

“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,” the plaintiffs continued. “We look forward to the court’s consideration of our joint request to vacate the rule.”