Late fees on credit cards remain one of the most common penalty charges faced by American consumers — and they continue to draw regulatory and political attention as lawmakers and the White House debate broader credit card reform.

Current Regulatory Framework for Late Fees

Under federal law, credit card late fees are regulated by Regulation Z, which implements the Truth in Lending Act and sets guidelines on how much issuers can charge for penalty fees. Historically, this has meant a safe harbor that allowed issuers to charge up to around $30 for a first late payment and up to about $41 for repeat late payments, adjusted for inflation.  

In 2024, the Consumer Financial Protection Bureau (CFPB) finalized a rule aimed at capping excessive late fees — proposing an $8 maximum late fee for large issuers to curb what it characterized as “junk fees” and save consumers billions annually.  

However, that rule has not taken effect. In 2025 a federal judge vacated (invalidated) the CFPB’s late-fee limit after the agency and industry groups agreed the rule exceeded statutory authority under existing law. That decision effectively left the higher statutory caps in place, meaning issuers can continue charging traditional late fees unless and until Congress or regulators successfully implement new limits.  

As a result, late fees in 2025-2026 continue to average around $30–$32 per missed payment for many cards.  

What Happens If a 10% APR Cap Is Enacted?

In January 2026, President Donald Trump publicly called for a temporary one-year cap on credit card interest rates at 10% APR, starting January 20. The proposal — widely discussed in financial and political news — does not yet have statutory force and would likely require congressional action to become law.  

This idea echoes bipartisan bills introduced in Congress, including one in the Senate (S.381) that would cap credit card rates at 10%.  

But how would an APR cap affect late fees?

• A 10% APR cap focuses on interest charges, not on penalty fees like late penalties. Any new cap on APR wouldn’t directly set or limit late fee amounts.
• Indirect effects are possible, though. If issuers earn less interest revenue due to stricter APR limits, they may try to compensate by increasing other fees (including late fees) or tightening eligibility for rewards-heavy cards. Some analysts argue issuers could reduce access to credit or drive up annual fees and penalties as margins tighten.  

Industry groups warn that strict rate caps could limit credit availability, push consumers toward less regulated lenders, or lead to higher fees elsewhere to preserve profitability — which could, in theory, include late fees or other penalties if regulators allow it.  

What Consumers Need to Know Now

• Late fees still exist at traditional levels, with no active federal cap at $8 — despite past regulatory efforts.  
• A proposed 10% APR cap would not automatically change late fees, but could shift issuer pricing strategies if implemented.
• Protecting your credit and avoiding penalties remains crucial: even one late payment can trigger fees and potentially higher interest rates on your account.

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