CFPB Erases Its Own $8 Credit Card Late Fee Cap: What It Means for Consumers

In a stunning about-face, the Consumer Financial Protection Bureau (CFPB) has officially scrapped its own $8 cap on credit card late fees, following a federal court ruling—and, surprisingly, at the request of the agency itself.

This move reverses a high-profile consumer protection effort and signals a broader shift in how financial regulations are being shaped under the current administration. Here’s what happened, what it means, and what’s coming next.

What Was the $8 Late Fee Rule?

In 2023, the CFPB introduced a rule aimed at capping most credit card late fees at $8. The goal? To curb what the agency labeled as “junk fees”—unnecessary and excessive charges that disproportionately affect lower-income consumers.

The bureau estimated that this rule could save U.S. households up to $10 billion per year in fees that often far exceed the actual cost incurred by credit card issuers to process late payments.

Consumer advocates largely applauded the effort, calling it long overdue. But the financial industry saw it differently—and quickly launched a legal battle to block it.

The Legal Challenge: Banks vs. Bureau

The rule was immediately challenged in court by a coalition of business groups, including the American Bankers Association, the U.S. Chamber of Commerce, and several credit card issuers.

Their core argument? That the cap violated the Credit Card Accountability Responsibility and Disclosure (CARD) Act, which allows late fees as long as they’re “reasonable and proportional” to the cost of collecting late payments.

Judge Mark Pittman of the Northern District of Texas oversaw the case. After twice rejecting attempts to transfer the case out of his courtroom, he eventually vacated the rule altogether—essentially erasing it from the books.

Why Did the CFPB Flip?

Here’s the twist: The CFPB itself asked for the rule to be vacated.

Now led by acting director Russell Vought, a Trump-aligned appointee, the bureau argued that it had overstepped its legal authority when it originally issued the rule. This dramatic reversal stunned consumer rights advocates and marked a clear departure from the agency’s previous priorities.

Banking industry groups called the ruling a “win for consumers and common sense,” arguing that capping fees would have had unintended consequences like:

• More late payments
  
  

• Lower credit scores
  
  

• Reduced access to credit
  
  

Their position is that higher fees deter bad financial behavior and help keep the credit ecosystem functioning smoothly.

But not everyone agrees.

Consumer rights organizations—including the National Consumer Law Center—warn that the ruling opens the door for banks to continue charging inflated late fees, often far above what it actually costs to process a late payment.

What’s Next for Financial Regulation?

The fall of the $8 late fee cap is not an isolated incident. It’s part of a broader regulatory rollback under the current CFPB leadership. Other changes already in motion include:

• Freezing or reversing Biden-era consumer protections
  

• Dropping enforcement actions against major institutions like Capital One
  
  

• Targeting overdraft fee caps and oversight of payment apps for repeal
  
  

In short, the agency that was once focused on protecting consumers is now pursuing a pro-business agenda.

Bottom Line: Higher Fees Ahead—Unless Congress Acts

With the late fee rule officially dead, consumers can expect higher fees to return unless Congress, the courts, or future administrations intervene.