Late payment fees for credit cards in the U.S.: what changes with the end of the rule in 2025

Understand the rules regarding late card fees in the U.S.

For millions of Americans, missing the payment deadline on a credit card bill has long meant facing a “late fee”, a penalty added by issuers on top of interest, potential credit-score impacts, and other consequences.

But the landscape of late payment fees is going through turbulence: what looked like a major win for consumers may now be unraveling. Here’s what happened, and what it means for cardholders in 2025 and beyond.

A Promising Reform, Then a Court Reversal

In March 2024, the Consumer Financial Protection Bureau (CFPB) announced a final rule aimed at slashing what many considered excessive “junk fees.”

Under the new regulation, large credit card issuers (those with more than 1 million open accounts) would have their “safe-harbor” late fee limit cut dramatically, from about US$30–US$41 down to US$8 per late payment.

The rule also eliminated automatic annual inflation adjustments on that cap and required issuers to justify any higher fees based on actual collection costs.

CFPB estimated that this change could save U.S. families over US$10 billion annually, reducing typical late fees from roughly US$32 to US$8, and delivering an average saving of around US$220 per year for 45 million cardholders who at some point pay late.

However, in a major turn of events, on April 15, 2025, a federal judge in Texas invalidated the rule.

The court found that by capping fees at US$8 and eliminating inflation adjustments, the CFPB had overstepped its authority under the Credit CARD Act of 2009.

Moreover, the agency itself joined the consent judgment to vacate the rule, meaning that, legally, the safe-harbor cap of US$8 no longer applies.

What This Means for Cardholders, Late Fees Likely to Return

With the rule officially vacated, credit card issuers are no longer bound to the $8 cap.

Instead, they may revert to the previous framework, or even impose late fees up to 100% of the missed minimum payment, depending on card agreement terms.

Some analyses suggest that in scenarios of recurring missed payments, cardholders might effectively pay twice (or more) the amount due.

In practice, average late fees could return to the pre-reform level (around US$30–US$40), depending on the issuer.

Credit-card companies may also continue using additional penalties for late payments, such as higher interest rates, loss of grace period, credit-limit reduction or negative credit reporting, as allowed under their contracts.

Why Did This Happen? The Legal & Political Context

The 2024 rule was part of a broader push under the Biden administration to crack down on “junk fees”, charges seen as unfair or opaque, and disproportionately impacting low-income and financially vulnerable Americans.

The aim was to bring more fairness and predictability to credit-card costs.

But several large banking trade groups, including the American Bankers Association and U.S.

Chamber of Commerce, challenged the rule in court. They argued that the cap interfered with their right to charge penalty fees that are “reasonable and proportional,” as established under the CARD Act.

Once the parties filed a consent judgment, the court vacated the rule, meaning the regulation no longer stands, and issuers are free to charge late fees under the prior regime.

What Consumers Should Do, How to Protect Yourself in 2025

Given the rollback, here are a few practical tips for credit-card holders in the U.S.:

• Read your card terms carefully: issuers may revert to charging substantial late fees (and additional penalties) for missed payments;
• Set up autopay or calendar reminders: missing a due date now carries more risk. Automatic payments or alerts can help avoid costly fees and credit-score impacts;
• Pay at least the minimum balance on time: even paying only the minimum by the due date helps avoid late fees and extra penalties;
• If faced with a late fee, ask for a waiver: some card issuers offer a “one-time courtesy waiver,” especially for first-time late payments. It never hurts to call and ask;
• Consider alternatives: for those frequently at risk of late payments, secured cards or debit-based payment methods may be safer than high-risk reward cards with heavy penalties.

The vacating of the late-fee rule signals a broader shift in regulatory priorities.

Under current conditions, large issuers regain greater flexibility to impose fees, and consumer protections on late payments are weaker than what was envisioned in 2024.

Still, the debate over “junk fees” is unlikely to disappear, lawmakers and consumer-advocacy groups may push for future legislation.

Meanwhile, other parts of the consumer-financial landscape are being revisited — but nothing guarantees similar outcomes.

For now, vigilance and financial discipline remain the best buffer consumers have against late-payment shocks.

Written by

Juliana Raquel