In a setback for the Biden administration, a former judge appointed by President Trump in Texas has halted the plan to reduce late fees on credit cards to $8. This ruling, issued by US District Judge Mark T. Pittman, came as a relief to credit card companies and major banks, which were facing potential revenue losses under the new rule.
The legal challenge against the Consumer Financial Protection Bureau (CFPB) was spearheaded by the US Chamber of Commerce, alongside other banking entities. Their argument centered on alleged violations of various federal acts by the rule, finalized in March.
Biden’s Credit Card Fee Reform Halted by Judge’s Ruling
The CFPB’s intended rule, slated to go into effect next week, aimed to remarkably decrease late fees from $32 to $8, potentially saving consumers over $10 billion annually. This move was anticipated to benefit around 45 million individuals who regularly incur late fees, with an average savings of $220 annually.
Maria Monaghan, Counsel at the U.S. Chamber of Commerce Litigation Center, hailed the court’s decision as a victory for responsible consumers and businesses. She argued that the CFPB’s regulatory intervention would have raised costs for most credit card users and hindered businesses’ ability to cater to consumer needs.
The Biden administration has been exploring various avenues to alleviate financial burdens for Americans, especially amongst rising inflation. Reducing credit card fees was seen as one strategy to mitigate the challenges associated with mounting credit card debt.
