A federal judge in Texas has rejected a Consumer Financial Protection Bureau (CFPB) regulation that would have limited credit card late fees to $8, dealing a significant blow to efforts to reduce financial burdens on consumers.

U.S. District Judge Mark Pittman in Fort Worth maintained his May injunction preventing the rule from taking effect, dismissing the CFPB’s request to lift the order. The proposed regulation would have restricted late fees for card issuers with over one million users, requiring them to demonstrate the necessity of higher charges.

The policy aimed to save consumers approximately $800 million in monthly late fees. However, business groups, including the U.S. Chamber of Commerce, quickly challenged the rule. They argued that substantial late fees are crucial for discouraging payment delays and maintaining affordable credit.

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Judge Pittman ruled that the proposed cap violated the 2009 Credit Card Accountability and Disclosure Act. Maria Monaghan from the Chamber’s Litigation Center celebrated the decision as a victory for “responsible consumers” and businesses.

The late fee cap was part of the White House’s broader initiative to eliminate what it calls “junk fees,” which includes regulations targeting hidden charges in various industries. The CFPB estimates that without such a cap, Americans will incur more than $56 billion in credit card fees over the next five years.

This ruling represents a setback for consumer advocacy efforts to reduce financial penalties and increase transparency in credit card billing practices.

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(Image credit: Wasatch Peaks Credit Union)