WASHINGTON —
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 Thursday 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 percent 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 upfront fees would have counted toward the 25 percent cap.
But the consumer agency is retreating from that idea after a court prevented it from taking effect. Its new rule would let banks charge whatever fees they want upfront. The 25 percent cap would apply only to fees charged after the card is issued.
