The Biden administration has unveiled a new regulation to cap all late credit card fees. This is the latest move in the White House’s campaign to eliminate what it has dubbed garbage fees. The new rules from the Consumer Financial Protection Bureau will either have banks justify late payments that are more than $8 or cap them at $8 for most credit cards. With the new regulation in place, the average credit card late charge would drop from $32 to $14 billion per year, according to the bureau’s projections.
At a meeting of his competitiveness council on Tuesday, President Joe Biden intends to showcase the idea with other initiatives to lower American prices. To combat unfair and unlawful pricing practices in several industries, including food, medicine, housing, and banking, the president of the United States is assembling a new strike force.
The White House Competition Council, which the Biden administration has promoted, aims to save money and increase competition in the US economy. According to a report from the White House Council of Economic Advisers, the ultimate goal of the Biden administration is to eliminate $20 billion worth of unnecessary taxes per year. According to the data, customers shell out about $90 billion annually for “junk fees” associated with car dealerships, apartment complexes, and concerts.
Nevertheless, Biden was not politically aided by the endeavor in the run-up to the presidential race this year. A recent Associated Press-NORC Center for Public Affairs Research poll found that only 34% of American citizens are satisfied with Biden’s economic leadership. Sen. Tim Scott (R-SC) voiced his disapproval of the Consumer Financial Protection Bureau’s (CFPB) proposed limit on late fees for credit cards, arguing that consumers will be hit worse in the long run by increased interest rates and less credit availability.
Credit card balances held by Americans exceeded $1.05 trillion in the third quarter of 2023, and this number is expected to rise when the Federal Deposit Insurance Corp. releases figures for the fourth quarter next month. There is growing worry that Americans, especially low-income families hit hard by inflation, may be carrying too much debt as late fees at big credit card issuers, including American Express, JPMorgan Chase, Citigroup, Capital One, and Discover, have been going higher for many quarters.
