CFPB Signals Possible New Review of Credit Card Late Fee Rules
The Consumer Financial Protection Bureau has taken the first procedural step toward revisiting federal regulation of credit card late fees, according to a new filing with the Office of Information and Regulatory Affairs (OIRA). The Bureau has submitted a Request for Information (RFI) titled “Credit Card Late Fees and Late Payments” for interagency review, although the document has not yet been released publicly.
The move is notable because it comes after the CFPB abandoned its defense of the Biden administration’s 2024 credit card late fee rule, which was later vacated as part of litigation brought by banking industry trade groups. While the new RFI does not necessarily signal a new rulemaking, it suggests the agency continues to view credit card late fees as an area of regulatory interest.
RFI Could Lay Groundwork for Future Rulemaking
An RFI is often an early step in the federal rulemaking process, allowing an agency to gather market data, stakeholder feedback, and empirical evidence before deciding whether to propose new regulations.
Because the CFPB has not yet published the request, it remains unclear what information the Bureau intends to seek or whether it plans to pursue another rule addressing late fees.
Industry participants will likely be watching for questions related to:
- Credit card issuer collection costs
- Consumer payment behavior
- The effectiveness of current Regulation Z safe harbor amounts
- Potential alternatives to the Bureau’s previous approach
Background on the 2024 Late Fee Rule
The latest development follows several years of CFPB scrutiny of credit card penalty fees.
In 2022, the Bureau issued an Advance Notice of Proposed Rulemaking seeking information about issuer costs, consumer payment behavior, and whether existing Regulation Z safe harbor amounts exceeded actual collection expenses. That process resulted in a final rule issued in March 2024.
The 2024 rule would have applied to larger credit card issuers and would have:
- Reduced the late fee safe harbor from $30 for an initial violation and $41 for subsequent violations to $8.
- Eliminated annual inflation adjustments to the safe harbor amount.
- Limited late fees to no more than 25% of the required minimum payment.
The CFPB estimated the changes would reduce consumer late fees by approximately $10 billion annually.
Litigation Prevented the Rule From Taking Effect
Banking industry trade associations challenged the rule shortly after it was finalized, arguing that the CFPB exceeded its authority under the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) and improperly imposed price controls on late fees.
The litigation prevented the rule from becoming effective. Following the change in administration, the CFPB stopped defending the regulation, and the parties later agreed to vacate the rule, leaving the previous Regulation Z late fee framework in place.
What Collectors and Creditors Should Watch
Until the RFI is released, it remains uncertain whether the CFPB intends to pursue another substantive rulemaking or simply update its understanding of current market conditions.
For creditors, issuers, compliance teams, and receivables professionals, the eventual contents of the RFI may provide early insight into the Bureau’s regulatory priorities. Areas to monitor include whether the agency:
- Revisits the methodology used to determine safe harbor late fees.
- Requests updated data on issuer collection costs.
- Seeks evidence regarding consumer payment patterns.
- Addresses the legal issues that contributed to the 2024 rule being vacated.
The RFI’s publication will likely determine whether the Bureau is preparing for a narrower regulatory proposal designed to withstand legal challenges or conducting broader market research before deciding on its next steps.
