Recently the Consumer Financial Protection Bureau (CFPB) finalized a revision to a 2011 rule on credit card fees. The 2009 Credit CARD Act (CARD Act) limited certain fees charged during the first year after the account is opened to 25 percent of the account’s initial credit limit. In April 2011, the Federal Reserve Board amended its rules implementing the CARD Act to extend this limitation to fees that the consumer must pay prior to opening an account— like, for example, an application fee.
The Board’s amendment was challenged on July 20, 2011 in the U.S. District Court for the District of South Dakota. On September 23, 2011, the Court granted a motion for a preliminary injunction preventing the amendment from taking effect.
In order to resolve the litigation, the CFPB issued an April 2012 proposal to amend the rule to be consistent with the court ruling so that it no longer applies to fees charged prior to account opening. The final rule adopts the proposal’s elimination of the cap on fees charged prior to account opening.
The final rule is available here.