Banking and Finance Law Daily Wrap Up, CREDIT, DEBIT AND GIFT CARDS—Credit card late fees cap proposed, (Jan 16, 2026)

By Jonathan Anderson

The proposal would codify a former CFPB rule that imposed the same cap, which the Trump Administration stopped defending and a court struck down.

Senators John Fetterman (D-Pa.), Cory Booker (D-N.J.), and Tammy Baldwin (D-Wis.) have introduced the Credit Card Fairness Act, which would set an $8 cap on credit card late fees. The bill seeks to codify a previous Consumer Financial Protection Bureau rule that had imposed the same fee limit, which was later struck down in court. The measure comes as President Donald Trump has proposed capping credit card interest rates at 10 percent, and amid other legislation targeting the credit card industry.

“American consumers shouldn’t be hit with predatory late fees that are three to five times higher than the actual cost of collection,” said Booker in a press release. “This legislation keeps money in the pockets of working families by putting a clear cap on credit card late fees and cracking down on banks that make billions of dollars of profit each year on the backs of their customers.”

Background. In March 2024, under the Biden Administration, the CFPB finalized a rule to reduce the typical credit card late fee from $32 to $8. The final rule amended Regulation Z, which implements the Truth in Lending Act (TILA), to address late fees charged by card issuers that together with their affiliates had one million or more open credit card accounts. The rule sought to adopt a late fee safe harbor threshold of $8 for those issuers and provided that the annual adjustments to reflect changes in the Consumer Price Index (CPI) would not apply to this $8 amount.

Industry groups, including the U.S. Chamber of Commerce and the American Bankers Association, subsequently sued to block the CFPB final rule. The plaintiffs filed the suit in the U.S. District Court for the Northern District of Texas. After Trump returned to office, the CFPB stopped defending the rule and filed a joint request with the plaintiffs asking the court to invalidate the rule, arguing that it violated the Credit Card Accountability and Disclosure Act and the Administrative Procedure Act. The court agreed and vacated the rule.

Credit Card Fairness Act. In crafting the Credit Card Fairness Act, the three Democratic Senators argue that the CFPB rule should not have been struck down. Text of the legislation states, in part, that “Congress believes [the previous CFPB late fee rule] . . . was appropriately promulgated as an extension of the Bureau’s authority, in existence at the time the rule was promulgated.”

In a press release, the senators argued that current late fees, which they said typically range from $30 to $41, are “up to five times higher than the cost for banks of collecting late payments, allowing banks to profit from customers who are struggling to make ends meet.” The bill amends Section 149 of TILA and sets an $8 credit card late fee limit for large credit card issuers, defined as a “credit card issuer that had 1,000,000 or more open accounts during the preceding calendar year.” The bill also would limit future cap changes to inflation adjustments.

The lawmakers said the bill has been endorsed by Americans for Financial Reform, the Consumer Federation of America, Groundwork Collaborative, the National Consumer Law Center, Public Citizen, and Protect Borrowers.

Venue for legal challenges. The bill seeks to require that any legal challenges to the law be filed in the U.S. District Court for the District of Columbia. A summary of the proposed legislation provided by the sponsors noted that the litigation brought against the former CFPB rule was filed in the Fifth Circuit, which the summary described as “ultra-right-wing.”

Other credit card legislation. On Jan. 13, 2026, Sens. Roger Marshall (R-Kan.) and Dick Durbin (D-Ill.) introduced legislation reviving a 2023 bill that effectively expired when no Congressional action was taken. The Credit Card Competition Act of 2026 is intended to promote greater competition in credit card routing networks and reduce costs for merchants and consumers. According to the sponsors, the bill would reduce merchant costs by requiring large card issuing banks to enable at least two unaffiliated networks on their cards. This change would give retailers more routing options and reduce swipe fees. Trump has expressed support for the reintroduced legislation. However, industry groups strongly oppose the bill, with banking and credit union associations arguing that imposing network routing mandates would harm consumers and small businesses by weakening fraud protections, reducing rewards programs, and increasing operational costs (see Banking and Finance Law Daily, Jan. 12 and Jan. 14, 2026).

Previous legislative efforts undertaken last year to cap credit card rates met with similar opposition from the banking industry. In February 2025, banking groups expressed their displeasure with legislation introduced by Sens. Bernie Sanders (I-Vt.) and Josh Hawley (R-Mo.) that would impose a national “fee and interest rate” cap of 36 percent. The banking industry also opposed legislation introduced in September by Durbin, Richard Blumenthal (D-Conn.), and Sheldon Whitehouse (D-R.I.) amending TILA to establish a national usury rate for consumer credit transactions.

In a Truth Social post on Jan. 9, 2026, Trump called for a one-year 10 percent cap on credit card interest rates effective Jan. 20, 2026. The American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America raised concerns with the idea.

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