Senator John Fetterman And Colleagues Introduce Legislation To Cap Credit Card Late Fees At $8

Stop us if you have heard this story before. Senator John Fetterman has introduced the Credit Card Fairness Act, a bill that would cap most credit card late fees at $8 by writing this limit into federal law. It is aimed at reversing today’s typical late fees of about $30–$41 and replacing them with a permanent $8 ceiling for large card issuers.​

What the bill does

• Sets a statutory $8 maximum late fee for “large” credit card issuers, generally those with at least 1 million active accounts.​

• Codifies an earlier Consumer Financial Protection Bureau (CFPB) rule that had cut the safe‑harbor late fee from around $30+ to $8, but which was later vacated in court and abandoned in litigation.​

• Allows the CFPB to adjust the $8 cap in the future for inflation, rather than letting issuers automatically hike fees each year.​

Who is behind it

• Lead sponsors are Senators John Fetterman (D‑PA), Cory Booker (D‑NJ), and Tammy Baldwin (D‑WI).​

• The bill is titled the Credit Card Fairness Act and has been introduced in the 119th Congress (2025–2026) as legislation amending federal credit card law to reduce excessive late fees.​

• It has support from consumer and advocacy groups that argue current late fees far exceed actual collection costs for banks.​

Why supporters say it matters

• Consumers now pay an estimated $14 billion per year in credit card late fees, much of it tied to standard charges of roughly $30–$41 per late payment.​

• Analyses used by the CFPB indicate that an $8 fee, on average, covers the true cost for large issuers to collect late payments, so higher fees function mainly as profit centers rather than cost recovery.​

• Backers argue the cap would particularly help people living paycheck‑to‑paycheck, who are most likely to incur repeated late fees.​

Key limits and scope

• The cap primarily targets large credit card issuers; smaller issuers are subject to different safe‑harbor rules and inflation adjustments under existing law.​

• Issuers could still charge more than $8 if they can substantiate that a higher amount is needed to cover their actual collection costs, consistent with Truth in Lending and CARD Act standards.​

• The bill’s text and summary emphasize that penalty fees must be “reasonable and proportional” to the violation, echoing existing statutory language but tightening the late‑fee ceiling.​

Criticism and next steps

• Banking and card‑issuer groups argue an $8 cap is too low, claiming it could reduce access to credit, lead to higher interest rates or annual fees, and weaken deterrence against late payment.​

• Trade groups previously sued to block the CFPB’s $8 rule and have signaled opposition to making that cap permanent through legislation.​

• The bill has been formally introduced but must still move through committee, floor votes in both chambers, and then be signed into law before any statutory $8 cap would take effect.​

Didn’t we already do this once?

The previous CFPB credit card late fee rule that set an $8 cap was struck down and is no longer in effect. As a result, the system reverted to the older “safe harbor” framework that allows higher late fees (around $30 for a first late payment and $41 for subsequent ones, with inflation adjustments).​

What the rule did

• The CFPB’s 2024 final rule lowered the safe‑harbor late fee for large issuers (over 1 million accounts) from about $30–$41 down to $8, and it eliminated automatic annual inflation increases.​

• It also removed the higher safe‑harbor amount for repeat violations and required issuers who wanted to charge more than $8 to prove their actual collection costs.​

Court challenges

• Industry groups including the U.S. Chamber of Commerce and major banking trade associations sued in federal court in Texas, arguing the rule exceeded the CFPB’s authority under the CARD Act and violated the Administrative Procedure Act.​

• In 2024 the court issued a preliminary injunction blocking the rule, and later found the challengers were likely to succeed because the $8 cap did not adequately account for deterrence and “reasonable and proportional” penalty fees.​

Vacatur and abandonment

• In April 2025, the CFPB and the industry plaintiffs jointly asked the court to enter a consent judgment vacating the rule, with the CFPB expressly conceding that the $8 cap violated the CARD Act and APA.​

• The judge approved the settlement and vacated the rule, formally eliminating the $8 cap and ending the litigation.​

Current framework after vacatur

• With the 2024 rule vacated, the prior safe‑harbor regime under the CARD Act and Regulation Z remains in place, allowing late fees up to roughly $30 for a first late payment and $41 for a subsequent one within six billing cycles, subject to inflation indexing.​

• The CFPB still has authority to revisit late fees through new rulemaking, but any future cap would need to address the court’s concerns about deterrence and proportionality.