The Consumer Financial Protection Bureau (CFPB) has sided with bank trade groups in asking a federal court to dismiss the credit card late fee rule, marking a significant shift from 2023 when regulators considered late fees “junk.” The proposed rule would have reduced average late fees from $32 to $8.
Industry experts had expected the CFPB to settle the litigation, and this move will save the credit card industry an estimated $10 billion annually. However, consumer advocates may view this as a step backward in reducing debt burden.
The shift in stance comes as consumers face rising inflation and potential tariff-related threats to their retirement savings. The recent uptick in charge-offs, with 4.48% of outstanding debts being written off as of Q4 2024, also raises concerns about the long-term risks facing credit card lenders.
While this settlement brings a temporary boost to the industry’s revenue, it is unlikely to mitigate the broader risk landscape. As consumers navigate uncertain economic conditions in 2025, experts warn that the threat of increased charge-offs and revolving debt poses significant challenges for credit managers.
Source: https://www.paymentsjournal.com/late-fees-no-longer-junk-back-to-contractual-commitments