Texas judge rejects rule to cap credit card late fees, seen as illegal

From Yahoo Finance: 2025-04-15 18:25:00

A Texas judge threw out a federal rule that would have capped credit card late fees, deemed illegal by officials and major banking groups. The rule was proposed under President Joe Biden’s administration to protect consumers from unfair practices by credit card companies.

The ruling came after the Consumer Financial Protection Bureau and industry groups agreed to throw out the rule, claiming it violated the CARD Act of 2009. Banks pushed to stop the rule, potentially losing billions in revenue. The CFPB estimated banks made around $14 billion annually in credit card late fees.

The banking groups hailed the decision as a win for consumers, stating the rule would lead to more late payments, lower credit scores, and reduced credit access. Even if the lawsuit had proceeded, the banks were likely to win, as a previous ruling found the rule violated the CARD Act.

The CFPB has faced turmoil since the Trump administration targeted it for mass firings and dropped enforcement actions. A federal judge temporarily stopped the agency’s demise. The CFPB was created after the 2008 financial crisis to protect consumers from unfair practices by financial institutions.

Read more: Texas judge throws out rule that would have capped credit card late fees