How to avoid credit card late fees now that they’re back

A Texas judge has thrown out a federal rule that would have capped credit card late fees at $8, which was part of the Biden administration's effort to eliminate "junk fees". The Consumer Finance Protection Bureau (CFPB) had estimated that American families would have saved over $10 billion in late fees annually if the cap had been implemented. The average credit card late fee has increased from $23 in 2010 to $32 in 2022, with the maximum fee being $41. Industry groups argued that the rule didn't allow card issuers to charge fees high enough to deter late payments. To avoid late fees, consumers can enroll in auto-pay, consider credit cards with no late fees, appeal to their credit card company, or make payments throughout the month. The CFPB had finalized the rule to cap late fees at $8, but it was paused by the courts before it could take effect. Industry groups welcomed the court's decision, while consumer advocates called it a "devastating blow" that would hurt low-income families and communities of color. The CFPB estimated that banks bring in roughly $14 billion in credit card late fees a year.