Overview

• A federal judge in Texas has officially vacated a Biden-era CFPB rule capping credit card late fees at $8, deeming it inconsistent with the Credit Card Accountability and Disclosure Act of 2009.
• The CFPB and six banking and business groups, including the American Bankers Association, filed a joint motion to dismiss the rule, effectively ending a year-long legal battle.
• Judge Mark Pittman ruled that the CFPB's late fee rule violated the CARD Act by failing to ensure penalty fees were reasonable and proportional to consumer violations.
• The rule, finalized in 2024, aimed to reduce late fees from $32 to $8, promising significant savings for consumers but faced strong opposition from the financial industry.
• Banking groups argued the rule would harm consumers by increasing late payments, lowering credit scores, and reducing access to credit, while diminishing incentives to pay bills on time.