Credit Card Industry’s Hail Mary to End Capping Late Fees

Credit card companies are asking a judge to overturn a federal rule that would cap late fees.
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  • Want to say goodbye to high late fees on credit cards?
  • You may have to keep dreaming.
  • A judge could side with credit card companies trying to prevent a new cap on fees at the last minute.

Credit card companies don’t waive their late fees so easily.

In March, the Consumer Financial Protection Bureau (CFPB) announced that the federal government had adopted a new rule capping late fees on credit cards.

The rule limits fees for a first violation to just $8, a measure the CFPB estimates will save U.S. customers billions.

But the backlash from the credit card industry was fierce, and they took the government to court over it.

This week, a federal judge in Texas is expected to rule on a request to suspend the new cap on late fees while a trial is underway, CNBC reported.

If the judge sides with the companies — and the U.S. Chamber of Commerce which joined the lawsuit — the fee changes would not go into effect.

The cap was scheduled to begin Tuesday.

Business Insider’s Emily Stewart recently warned that it’s too early to start celebrating the end of high fees. Despite President Joe Biden’s election-year efforts to reduce so-called “junk fees,” credit card companies won’t sit still, she wrote.

Even if they fight the rule changes in court, companies will likely find other ways to recoup money by raising other fees, Stewart reported.

Matt Schulz, chief credit analyst at LendingTree, told BI at the time, “I imagine we’ll see other fees increase in the coming time.” »

One example could be annual fees, which are already rising and could be increased further to avoid customers who don’t pay attention to their statements, BI previously reported.