Texas Court Suspends Biden Administration Order to Limit Credit Card Late Fees

In Fort Worth, Texas, federal judge Mark T. Pittman halted a new Biden administration rule banning credit card late fees of more than $8. Judge Pittman, who was appointed by former President Donald Trump, issued this ruling in favor of businesses and banking institutions that alleged violations of various federal laws.

Judicial Hurdle and Background of the Case

Several organizations, led by the US Chamber of Commerce, filed a lawsuit against this rule, which the Biden administration enacted in March. The Consumer Financial Protection Bureau (CFPB) estimated that the rule would save consumers about $10 billion annually. However, this injunction prevents the rule from being implemented until a hearing is held in which it will take effect.

Implications for Consumers and the Economy

“Delaying this rule would impose $800 million in late fees on consumers each month, which would increase the profit margins of the largest credit card issuers,” a CFPB spokesperson told CNN. The rule was expected to give a sigh of relief to low-income consumers and millennials, especially those struggling with high inflation.

Industry Reactions and Public Perception

Chuck Bell, director of Consumer Reports’ advocacy program, expressed disappointment with the court’s decision, saying, “For too long, credit card companies have been ripping off consumers with billions of dollars in excessive late fees.” According to polls, 82% of Americans support lowering the maximum late fee.

Conclusion What to Expect in the Future?

This is critical as part of the Biden administration’s effort to combat hidden or misleading fees to consumers. The future of the rule will become clearer after a more detailed judicial process. In the meantime, millions of Americans are struggling with this uncertainty and are carefully watching the next steps of credit card issuers.