Judge tosses Biden-era CFPB rule capping credit card late fees

A federal judge in Texas tossed a former President Biden-era Consumer Financial Protection Bureau (CFPB) rule that capped credit card late fees to $8 after both sides on the issue agreed that it was illegal. 

U.S. District Judge for the Northern District of Texas Mark Pittman allowed the dismissal on Tuesday pushed by both the group of six banking and business interest groups and the consumer watchdog agency. 

Pittman, a President Trump appointee, said the rule, which was finalized by the CFPB last year during the Biden administration, violated the Credit Card Accountability and Disclosure Act of 2009 because it failed to allow card issuers to “charge penalty fees reasonable and

proportional to violations.” 

The rule was cemented in March of 2024 and limited late payment fees issued by credit card companies. At the time, the CFPB said the rule would allow U.S. consumers to save an average of $220 annually. 

The Biden White House said at the time the rule was part of the administration's push to curb “junk fees” or other charges levied against consumers. 

The six groups - the American Bankers Association, the U.S. Chamber of Commerce, Fort Worth Chamber of Commerce, Longview Chamber of Commerce, Consumer Bankers Association and Texas Association of Business - who are opposed to the rule and filed the lawsuit last year against the consumer watchdog agency, welcomed Tuesday’s decision by Pittman, touting it is a win for consumers and “common sense.” 

“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 organizations said in a joint statement on Tuesday. “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 current administration has pushed to eliminate CFPB, the government agency founded in 2011. 

Last week, a federal appeals panel indicated it was looking to find a happy medium as it looks to decide if it will halt the order to prevent the administration from terminating the agency.