By Cora Lewis
NEW YORK (AP) – A Texas judge earlier this month dumped federal rules that limit credit card deferral fees at $8.
The Consumer Finance Protection Agency finalised the rules last year as part of the Biden administration’s efforts to eliminate what is known as junk fees. Before it took effect, it was suspended by the court.
At the time, the CFPB estimated that American families saved more than $10 billion in late fees a year.
Banks and industry groups argued that the rules did not allow card issuers to charge high enough to prevent late payments and discourage repeated violations.
The Texas judge’s ruling earlier this month was the day after the collections of major trade associations and the CFPB, and the CFPB under President Donald Trump announced that they had reached an agreement to abandon the rules.
Here are some things you need to know about credit card deferral fees:
What is the average credit card late fee?
According to the CFPB, the average deferred fee for major publishers has been steadily checked since the 2010s, starting from $23 at the end of 2010 to $32 in 2022. Wallethub, which tracks financial data, found that the average late fee for 2025 was $30.50, up to $41.
A September 2023 consumer report estimated that one in five American adults, or about 52 million, paid late credit card fees the previous year. According to the CFPB, low-income people pay proportionally large fees when the highest burden on communities of color and salaries is lowered.
How can consumers avoid the fees?
Signing up for automatic credit card payments can help you avoid late payments. There are also absolutely no credit cards that do not charge late fees (but it is important to note that these cards have other charges or penalty structures, or higher interest rates).
City’s simplicity and Apple Cards are currently not charging deferred fees, and Discover offers cards that automatically waive your initial late fees.
You can also call the credit card company directly to appeal the late fees of credit cards charged. Companies often reverse fees, especially if they are the first slow payment.
You can also consider paying your credit card balance during the month. This means you paid more balance before the amount was paid, and you can improve your credit score by keeping your balance low compared to your credit limit.
If you are struggling with something rewarding, you can ask your credit issuer about the struggle program. These are usually available to people affected by unemployment, illness or illness, natural disasters, or other emergencies.
What are the limits on late fees for CFPB credit cards?
Concerned that credit card companies are building business models based on high penalties, Congress passed the 2009 Credit Card Accountability and Disclosure Act (Card Act).
In 2010, the Federal Reserve voted to issue regulations enforcing the Card Act. This said banks can only charge fees to recover costs associated with late payments.
However, the rules include a “disclaimer” in which some banks charge $25 for their initial payments and $35 for later late payments, adjusting for inflation each year. These amounts then increased to $30 and $41.
After reviewing market data, the CFPB completed the rules that limit late fees to $8 and end automatic inflation adjustments. Based on records analyzed by the CFPB, the $8 late fee is, on average, sufficient to cover collection costs incurred as a result of delayed payments by card issuers.
How did the banking group respond to the court’s decision?
Industry groups including the Consumer Bankers Association, the American Bankers Association and the American Chamber of Commerce and Industry have said they welcomed the court’s decision to eliminate CAP.
The group said the rules will lead to higher interest rates and reduced credit access for cardholders. The group also said the rules “reduced important incentives for consumers to manage their finances.”
The CFPB estimates that banks will bring about $14 billion in credit card late fees per year.
How did consumer advocates respond?
Horacio Méndez, president and CEO of Woodstock Institute, an organization that promotes economic equity, called the domination “a catastrophic blow.”
“By abandoning CFPB’s common sense rules and reducing these predatory late fees, some are as high as $41. “The CFPB rules came from clear evidence. The credit card industry used inflated late fees as a profit engine, forcing families to have the least financial cushioning.”
Mendes said that while consumers have come to expect fees for services, these fees need not be punitive to be effective.
The Associated Press is supported by the Charles Schwab Foundation for education and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Original issue: April 29, 2025, 2:51pm EDT
