A federal judge in Texas has halted a Biden administration-developed rule that would curb credit card late fees to just $8 per incident, down from an average of $32. The rule—which brings in about $9 billion a year for credit card companies—was scheduled to take effect tomorrow.
The judge cited a 2022 decision by the U.S. Court of Appeals for the Fifth Circuit that found that funding for the Consumer Financial Protection Bureau, which would enforce the rule, is unconstitutional.
“This injunction will spare banks from having to immediately comply with a rule that clearly exceeds the CFPB’s statutory authority and will lead to more late payments, lower credit scores, increased debt, reduced credit access and higher APRs for all consumers — including the vast majority of card holders who pay on time each month,” said ABA CEO Rob Nichol.
