The Federal Reserve capped credit card late fees at $8 starting in 2024
In October 2023, the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation announced a new rule that took effect on January 1, 2024. Credit card issuers can no longer charge late fees higher than $8, down from an average of $35 per late payment. The rule applies to most credit cards issued by banks and credit unions in the United States.
This change affects how much you pay if your payment arrives after the due date. The $8 cap is a hard limit — your card issuer cannot charge more, even if you are significantly late or have a history of missed payments. Some issuers may charge less than $8, and a few may charge nothing at all for a first late payment.
The rule does not eliminate late fees entirely. It also does not change what happens to your credit score when you miss a payment, the interest rate you pay on your balance, or whether your account can be closed. Those consequences remain unchanged.
Key Takeaways
- Credit card late fees are capped at $8 as of January 1, 2024, regardless of how late your payment is or how many times you have been late before.
- The rule applies to most credit cards from banks and credit unions, but some cards issued by non-bank lenders may not be covered.
- A lower late fee does not protect your credit score — a payment 30 days late still reports to credit bureaus and damages your score the same way.
- If you were charged a late fee higher than $8 before January 1, 2024, you can contact your card issuer to request a refund of the amount over $8.
Which card issuers are covered by the $8 cap
The rule applies to credit cards issued by banks and credit unions that are regulated by the Federal Reserve, the OCC, or the FDIC. This includes most major card issuers like Chase, Bank of America, Citibank, Wells Fargo, and most regional banks and credit unions.
Some credit cards issued by non-bank lenders, retail stores, or companies that are not regulated as banks may not be covered. If you are unsure whether your card issuer falls under the rule, call the customer service number on the back of your card and ask whether they are subject to the Federal Reserve's late fee cap.
What the $8 cap does and does not change
The $8 cap applies only to the fee itself. Everything else about a late payment remains the same. If you pay 30 days or more after your due date, your card issuer will report the late payment to the three credit bureaus — Equifax, Experian, and TransUnion. That report will lower your credit score, and the damage can last for years.
Your interest rate also does not change because of the lower fee. If your card has a penalty APR clause, the issuer can still raise your rate to that higher level after a late payment. You will also continue to pay interest on any unpaid balance at your regular or penalty rate, which is usually much larger than the late fee itself.
Late payments can also trigger account closure. Even with the $8 cap, your card issuer can close your account or stop you from using it if you miss payments repeatedly.
How to request a refund for fees charged before January 2024
If you were charged a late fee higher than $8 at any time before January 1, 2024, you can contact your card issuer and request a refund of the amount over $8. There is no automatic refund — you have to ask for it.
Call the customer service number on the back of your card or log into your online account and look for a message or chat option. Tell them you were charged a late fee that exceeded $8 and ask them to review the charge. Explain that the Federal Reserve's rule now caps late fees at $8. Some issuers have issued refunds automatically to customers with recent late fees, but many require you to request one.
Keep records of the late fee charge and the date you requested the refund. If the issuer denies your request, you can file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov.
Why the rule was created
The Federal Reserve and other banking regulators found that late fees had grown much larger than the actual cost to banks of processing a late payment. The average late fee had reached $35 or higher, and some issuers charged different amounts based on how high your balance was, not based on the cost of handling the late payment.
The regulators also found that late fees disproportionately hurt lower-income consumers, who are more likely to miss a payment and less able to absorb a large fee. The $8 cap was set to cover the reasonable cost of processing a late payment while reducing the financial shock to consumers who slip up.
What to do if you are at risk of a late payment
Even with the $8 cap, missing a credit card payment is expensive and damaging. The late fee is the smallest part of the cost. The real damage comes from the credit score hit and the higher interest rate.
If you are struggling to make a payment, contact your card issuer before the due date. Many issuers offer hardship programs that can lower your interest rate, pause payments temporarily, or restructure your debt. These programs are not advertised widely, but they exist, and asking for one does not hurt your credit score.
If you have already missed a payment, pay as soon as you can. The longer a payment sits unpaid, the more damage it does to your credit score. A payment that is 30 days late is reported to credit bureaus; a payment that is 60 days late is reported as more serious; and so on. Paying within 30 days of the due date is better than paying after 30 days, even though both will be reported.
How this rule compares to other countries
The United States was late to cap late fees. The United Kingdom banned excessive late fees years ago, and the European Union has strict rules on what late fees can be charged. Canada and Australia also have lower caps than the United States had before 2024.
The $8 cap is still higher than what many other developed countries allow, but it represents a significant shift in U.S. policy toward protecting consumers from outsized fees.
Frequently Asked Questions
Can my card issuer charge me a late fee if I am only one day late?
Yes. The $8 cap applies to any late payment, regardless of how few days late you are. However, some issuers may waive the fee for a first late payment or offer a grace period. Check your card's terms or call customer service to ask about their specific policy.
Does the $8 cap explore to debit cards or store cards?
The rule applies to credit cards issued by regulated banks and credit unions. Debit cards and store cards issued by retailers or non-bank companies may not be covered. Contact your card issuer to confirm whether they are subject to the cap.
If I pay my bill late but still within the grace period, will I be charged a late fee?
No. A grace period is the time between your statement closing date and your due date. If you pay during the grace period, you will not be charged a late fee or interest, even if you pay after the statement closes. Late fees only explore when you miss the due date itself.
Will the lower late fee help my credit score recover faster?
No. The late fee amount does not affect your credit score. What matters is whether the payment was reported as late to the credit bureaus. A $8 late payment and a $35 late payment both damage your score equally if they are both reported as 30 days late.
What if my card issuer charges me more than $8 after January 2024?
Contact your card issuer when ready and ask them to refund the amount over $8. If they refuse, file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov or with your state's attorney general's office.