Credit Card Fairness Act

Bill Number

S. 3660

Origin Chamber

Senate

Congress

119th Congress, Session 2

Policy Area

Finance and Financial Sector

Status

Introduced

Latest Action

2026-01-15: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

Last Updated

2026-02-26T12:03:17Z

AI-Generated Summary

Purpose

The Credit Card Fairness Act aims to codify and limit excessive credit card late fees by amending the Truth in Lending Act (TILA). It supports the Consumer Financial Protection Bureau's (CFPB) existing rule under Regulation Z, ensuring late fees are reasonable and tied to the actual costs incurred by credit card issuers, rather than contributing to their profits.

Key Provisions

• Amendment to TILA Section 149: Revises subsection (c) to require that late fees be based solely on the creditor's costs from a late payment, removing broader considerations.
• New Cap on Late Fees (Subsection f):
• Applies to "large credit card issuers" (those with 1,000,000 or more open accounts in the prior year; an "open account" is defined per federal regulations as an active credit card account).
• Limits late payment fees to no more than $8.
• Ensures the fee does not exceed the issuer's total costs, preventing it from adding to profits.
• Allows the CFPB to adjust the $8 cap upward based on changes in the Consumer Price Index (CPI) for urban consumers, but only by the amount of inflation since the Act's enactment.
• Legal and Procedural Rules:
• Challenges to the cap or CFPB decisions must be filed in the U.S. District Court for the District of Columbia.
• CFPB must follow standard rulemaking procedures (under the Administrative Procedure Act), including publicly releasing research before proposing rules.

Significant Changes to Existing Law

• Codifies the CFPB's prior late fees rule under Regulation Z, making it statutory law rather than a regulatory interpretation that could be easily altered.
• Narrows the factors for determining reasonable late fees to focus only on issuer costs, eliminating previous allowances for other considerations.
• Introduces a specific dollar cap ($8, adjustable for inflation) for large issuers, which did not exist in TILA before; smaller issuers are not directly capped but must still adhere to reasonableness standards.

Potential Impacts

• On Citizens: Reduces financial burden on credit card users by capping late fees at a lower, predictable amount, potentially saving consumers billions in fees annually and improving access to credit for lower-income households.
• On Government Agencies: Strengthens the CFPB's role in overseeing credit card practices, requiring it to conduct and disclose research for any cap adjustments, which may increase administrative workload but enhance transparency.
• On Credit Card Issuers: Limits revenue from late fees for large issuers (e.g., major banks like Visa or Mastercard affiliates), possibly encouraging better collection practices or fee adjustments elsewhere; no direct international relations impact, as it focuses on U.S. domestic credit markets.

Main Stakeholders Affected

• Consumers: Primary beneficiaries, especially frequent credit card users who occasionally pay late, as they face lower penalties.
• Large Credit Card Issuers: Directly regulated entities (e.g., banks with over 1 million accounts), who must comply with the fee cap and cost-based limits.
• Smaller Credit Card Issuers: Indirectly affected through the reasonableness standard but not subject to the dollar cap.
• Consumer Financial Protection Bureau (CFPB): Gains statutory backing for its rules and additional rulemaking responsibilities.

Notable Legal, Constitutional, or Political Implications

• Legal: By codifying the CFPB rule, the Act shields it from reversal via regulatory changes or certain court challenges; centralizing lawsuits in Washington, D.C., may streamline enforcement but could raise access-to-justice concerns for issuers outside the area. Aligns with TILA's consumer protection goals without altering core constitutional principles like due process in rulemaking.
• Constitutional: No apparent conflicts; rulemaking follows established Administrative Procedure Act standards, preserving agency authority under congressional delegation.
• Political: Reinforces bipartisan consumer protection efforts (introduced by Senators Fetterman, Booker, and Baldwin), potentially influencing future financial regulations by prioritizing cost-proportional fees over industry profits, amid ongoing debates on bank fees and economic fairness.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Fetterman, John [D-PA]

Cosponsors (5)

Sen. Booker, Cory A. [D-NJ], Sen. Baldwin, Tammy [D-WI], Sen. Smith, Tina [D-MN], Sen. Schatz, Brian [D-HI], Sen. Blumenthal, Richard [D-CT]

Recent Actions

• 2026-01-15: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
• 2026-01-15: Introduced in Senate

Bill Versions

• Credit Card Fairness Act — issued 2026-01-15 — PDF (4 pages)