WASHINGTON—Amid renewed Washington scrutiny of credit card practices following President Trump’s recent call for a nationwide 10% interest-rate cap, Sen. John Fetterman (D-PA) has introduced legislation that would cap credit card late fees at $8, adding to a growing slate of proposed consumer crackdowns.
Fetterman’s Credit Card Fairness Act, backed by Sens. Cory Booker (D-NJ) and Tammy Baldwin (D-WI), would codify into law an $8 late-fee cap previously finalized by the Consumer Financial Protection Bureau but stalled by court challenges. Consumers currently pay an estimated $14 billion annually in late fees, according to published reports, with proponents arguing the charges far exceed banks’ actual collection costs, WTAJ said.
“Big banks profiteering off people by charging $41 for a single late credit card payment is absolutely wrong,” Fetterman said, arguing the fees worsen financial strain for households already under pressure.
According to WTAJ, the bill has drawn support from consumer advocacy groups including Americans for Financial Reform, the Consumer Federation of America, Groundwork Collaborative, the National Consumer Law Center, Public Citizen, and Protect Borrowers.
CU Trade Groups React
America’s Credit Union stated that credit unions are steadfastly committed to supporting affordability and helping American families through tough times.
“They structure their programs and costs to meet that mission and have for nearly a century. Most credit unions already charge significantly lower late fees than large banks, but the policy itself was deeply flawed, and it remains flawed today,” said Scott Simpson, ACU president/CEO.
Hard price caps are a blunt instrument, and they rarely work the way people hope, Simpson asserted.
“A rigid $8 cap does not come close to covering the real costs of servicing accounts and managing risk. When those costs are ignored, they do not disappear,” he said. “They get shifted onto consumers who pay their bills on time through higher fees, fewer card options, or reduced benefits, while access to credit tightens for those who need it most. We raised these concerns when the CFPB proposed its rule, and the same problems exist here.
“If we want to help consumers long-term, we should focus on policies that expand access to fair, affordable credit, not ones that risk shutting people out when they need it most,” continued Simpson. “The courts recognized this fact when it vacated CFPB’s misguided rule on credit card late fees. Unfortunately, the Credit Card Fairness Act is attempting to repeat that mistake.”
The Defense Credit Union Council said it strongly opposes the legislation as currently drafted and advanced in Congress.
"While the goal of protecting consumers from excessive costs is laudable, this bill mirrors the same structural flaws we’ve outlined in multiple advocacy communications and letters to congressional leadership: arbitrary fee caps and rigid price controls that undermine access to affordable credit for military families and the broader credit union community," said DCUC Chief Advocacy Officer Jason Stverak. "In our May 8, 2024 letter to the Senate Banking Committee on the CFPB’s credit card late-fee rule, DCUC clearly articulated that blunt government mandates on late fees distort market incentives, ultimately raising costs for consumers rather than lowering them. We emphasized that credit unions already operate under rigorous standards designed to ensure responsible, mission-driven lending while protecting members — including servicemembers — from unfair and deceptive practices. Those principles are absent in the now re-introduced fairness act."
More recently, DCUC has consistently warned Congress that one-size-fits-all policy interventions — whether late fee caps, interest rate ceilings, or prescriptive fee limits — risk unintended consequences that directly conflict with military financial readiness.
"Hard caps on late fees will inevitably force mission-oriented credit unions to offset shortfalls in lawful, proportional fees through increased interest, reduced credit availability, fewer low-cost products, or eliminated benefits," Stverak said. "This shift not only diminishes the utility of credit card products for disciplined payers but also disproportionately harms young enlisted personnel, spouses managing dual-military portfolios, and lower-income members who rely on responsible credit access during deployment cycles and unexpected financial events. The market — not policymakers — must remain the arbiter of risk and price so that credit unions can fulfill their core mission of serving those who serve our nation."
Stverak added that DCUC remains committed to working with Congress on "targeted, evidence-based solutions" that protect consumers without cutting off access to credit for the very communities this legislation intends to help.”