Consumer agency softens credit card fee limit

The Obama administration’s consumer financial watchdog agency is backing off a plan to limit big upfront fees on credit cards. The Consumer Financial Protection Bureau acknowledged today that its proposal would increase costs for cardholders and allow banks to charge more in fees. Banks aren’t allowed to charge fees totaling more than 25% of a person’s credit limit in the first year that the account exists. But there’s no limit to the fees they can charge before the card is activated. Under a rule proposed last year, those up-front fees would have counted toward the 25% cap. But the CFPB is retreating from that idea after a court prevented it from taking effect. The consumer agency’s new rule would let banks charge whatever fees they want up front. The 25% cap would only apply to fees charged after the card is issued. The CFPB was set up after the financial crisis to protect consumers from loans and cards with hidden fees or other traps. Get the full story from The Associated Press here.