Senate Democrats Introduce Legislation Capping Credit Card Late Fees

Senate Democrats have introduced a bill called the Credit Card Fairness Act that would cap most credit card late fees at 8 dollars, effectively writing a previous regulatory cap into law.​

What the bill does

• Caps late fees charged by “large” credit card issuers (those with at least 1 million active accounts) at 8 dollars per missed payment, unless issuers can prove higher actual collection costs.​

• Codifies into statute the Consumer Financial Protection Bureau’s earlier 8‑dollar late‑fee rule, which had been blocked and later vacated in court after challenges from banking trade groups.​

• Allows the CFPB to adjust the cap over time to reflect inflation, rather than automatic annual inflation hikes set by earlier regulations that helped push late fees up to 30–41 dollars.​

Who is behind it

• The bill is led by Democratic Senators John Fetterman (Pennsylvania), Cory Booker (New Jersey), and Tammy Baldwin (Wisconsin).​

• The sponsors argue big banks are “profiteering” by charging late fees of up to 41 dollars, which they say are three to five times the true cost of collecting late payments.​

• Their stated goal is to reduce what they describe as predatory penalty fees at a time when consumers are already under financial strain.​

Why it matters for consumers

• Americans pay around 14 billion dollars a year in credit card late fees, much of it driven by standard charges in the 30–41‑dollar range.​

• The earlier CFPB 8‑dollar rule was projected to save families about 10 billion dollars per year, or roughly 220 dollars annually for the more than 45 million people who incur late fees.​

• If enacted, this bill would give those savings a firmer legal basis by making the 8‑dollar cap a matter of federal law rather than just regulation.​

Context and opposition

• The CFPB’s 8‑dollar cap, finalized in 2024, faced an injunction and was ultimately vacated in 2025 after a settlement in which the agency agreed it exceeded its authority under the CARD Act and Administrative Procedure Act.​

• Banking and business groups argued the cap did not allow “reasonable and proportional” penalty fees and failed to account for deterrence or repeat violations.​

• The new legislation attempts to resolve those legal questions by having Congress itself set the 8‑dollar limit for large issuers, while still permitting higher fees if justified by documented costs.