Staff Reports
A federal judge in Texas has put a stop to President Biden’s plan to lower late fees on credit cards to $8. This plan was set to start next week, but Judge Mark Pittman from the Northern District of Texas said no for now. This decision is a win for big banks and major credit card companies, which make a lot of money from late fees and didn’t want the new plan to go through. The U.S. Chamber of Commerce helped the banks file the lawsuit and they are happy with the judge’s decision.
A Biden administration plan to lower credit card late fees to $8 has been halted by a judge in Texas. It was slated to go into place next week. https://t.co/am25T8l21C
— ABC15 Arizona (@abc15) May 12, 2024
The rules that were going to change the late fees were made by the Consumer Financial Protection Bureau. They said that most credit card late fees should not be more than $8, unless the bank can give a good reason why they need to charge more. Right now, the average late fee is $32 and banks get about $14 billion each year from these fees.
The banks had tried to stop the new rules before, but they had a hard time because the judge said the case should happen in Washington, D.C., not in Texas. But then another court said most of the case could happen in Texas and told the judge to make a decision about whether to put a stop to the new rules.
President Biden has said that he wants to stop what he calls “junk fees,” which are fees that banks charge for things like being late on a payment, using an ATM, or spending more money than is in an account. Some people think the banks charge too much for these fees and want them to be lower.
Liz Zelnick with Accountable.US said that the U.S. Chamber of Commerce is happy that families will have to keep paying high late fees on their credit cards for now. She thinks the Chamber is just trying to make more money for big companies, even if it is not good for families.
