In March, the Consumer Financial Protection Bureau announced that a new federal rule would cap fees on late credit card payments at $8 per month, estimating that the change would save American households $10 billion annually.
On Friday, a federal judge in Fort Worth temporarily blocked the rule, siding with lobbyists for banks and credit card companies who claim in a lawsuit that it is unconstitutional.
The rule was scheduled to take effect on Tuesday. Now, the lobbyists can continue their legal fight in U.S. District Court before Judge Mark T. Pittman, who issued the preliminary injunction.
The Consumer Bureau’s new rule will cap issuers with an $8 fee unless they can prove that more money is needed to cover collection costs. The bureau estimated that the rule would apply to more than 95 percent of all outstanding credit card balances.
The Fed had previously aimed to significantly limit credit card late fees in 2010. But a loophole in its rule, which allowed for inflation adjustment, allowed banks and credit card companies to charge late fees that averaged $32 a month, according to the consumer. office .
Announcing the new rule, Rohit Chopra, the bureau’s director, said it would end “the era of major credit card companies hiding behind inflation when they raise fees on borrowers and boost their bottom lines.” President Biden supported this rule, saying: “The American people are tired of being manipulated for fools.”
Two days later, the U.S. Chamber of Commerce joined the American Bankers Association and the Consumer Bankers Association — whose boards include executives from Bank of America, Capital One, Citibank and JPMorgan Chase — in suing Mr. Trump. Chopra and his office. Three Texas business associations are also plaintiffs.
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