CFPB may reopen fight over credit card late fees
For consumers, the stakes are familiar: banks say late fees deter missed payments and keep costs down for on-time payers; consumer advocates say the fees have become a major profit center.
The Consumer Financial Protection Bureau may be getting ready to reopen one of the most contentious consumer finance battles of the last several years: how much banks can charge when credit card customers pay late.
The Office of Information and Regulatory Affairs, the White House office that reviews significant agency actions, shows that the CFPB submitted a “Request for Information Regarding Credit Card Late Fees and Late Payments” on July 6. The item is listed as a “prerule” action, meaning it could be an early step toward a future regulation, although the actual request has not yet been released publicly, according to RegInfo.gov.
The move is notable because the CFPB, now operating under Acting Director Russell Vought, has backed away from a number of Biden-era regulatory initiatives. But credit card late fees appear to remain on the agency’s agenda, even after the bureau abandoned its earlier effort to cap most large-issuer late fees at $8, the newsletter Consumer Finance Monitor noted.
The Editors
A rule that never took effect
The CFPB’s March 2024 rule would have sharply reduced the “safe harbor” amount that large credit card issuers could charge without having to justify the fee. The previous safe harbor was $30 for a first late payment and $41 for subsequent late payments; the Biden-era rule would have lowered that to $8, eliminated automatic inflation adjustments, and limited late fees to no more than 25% of the required minimum payment.
The CFPB estimated at the time that the rule would save consumers about $10 billion a year. The bureau said credit card late fees had grown to more than $14 billion in 2022 and that the average fee charged by major issuers had risen from $23 at the end of 2010 to $32 in 2022.
But the banking industry quickly challenged the rule, arguing that the CFPB had exceeded its authority under the Credit Card Accountability Responsibility and Disclosure Act, commonly known as the CARD Act. Banks and business groups said the rule amounted to an unlawful price control and failed to account for the cost and deterrent value of late fees.
A federal judge blocked the rule before it could take effect, and in April 2025 the rule was vacated after the CFPB and industry groups jointly asked the court to scrap it. The CFPB’s own compliance page now notes that the credit card penalty-fee rule was vacated by court order on April 15, 2025.
Why reopen the issue now?
Because the new request for information has not yet been released, it is not clear whether the CFPB is considering another late-fee cap, a narrower rule, or simply gathering updated market data.
Consumer Finance Monitor, published by Ballard Spahr, noted that an RFI is often the first formal step in a rulemaking process. The firm said the CFPB could be trying to update the record on delinquency rates, consumer borrowing, interest rates, issuer costs, and consumer payment behavior since the bureau’s 2022 inquiry.
The CFPB may also be looking for a more legally durable approach. The earlier $8 rule ran into arguments that the CARD Act allows penalty fees so long as they are “reasonable and proportional” to the violation, and that regulators cannot simply set a fee level that ignores deterrence or issuer costs.
The new filing also comes as credit card costs remain a political issue. Late fees are only one piece of the burden facing cardholders. Consumers who miss payments can also face interest charges, loss of a grace period, credit-score damage, credit-limit reductions, and higher rates on future purchases.
Banks say caps could backfire
Banks and business groups have argued that limiting late fees would not make credit cheaper overall. Instead, they say issuers would make up the lost revenue through higher interest rates, annual fees, reduced rewards, or tighter credit standards.
The U.S. Chamber of Commerce, one of the groups that challenged the 2024 rule, said the cap would have punished cardholders who pay on time by forcing them to subsidize the costs of late-paying customers. It also argued that the existing disclosure rules already tell consumers what late fees apply before they open an account.
Consumer advocates have long taken the opposite view, arguing that late fees have grown far beyond the actual cost of collecting missed payments and have become part of a broader “junk fee” business model. The CFPB made that case in 2024, saying large issuers charged more than $14 billion in late fees in 2022 and that many issuers raised fees in lockstep with inflation even without evidence that their costs had increased.
What consumers should watch
For now, nothing has changed for cardholders. The $8 cap is not in effect, and the preexisting late-fee framework remains in place.
The next important step will be the release of the CFPB’s request for information. That document should show whether the bureau is merely collecting data or laying the groundwork for another rule. It should also reveal whether the agency is focused on fee levels, payment behavior, issuer costs, annual inflation adjustments, or broader affordability concerns in the credit card market.
For consumers, the practical advice remains the same: set up payment reminders, consider automatic minimum payments, and contact the card issuer quickly after a missed payment. Many issuers will waive a first late fee, especially for customers with a good payment history, but repeat late payments can quickly become expensive and can damage credit scores.
