The Biden Administration Has Announced A Rule To Limit Credit Card Late Fees To $8

The Biden administration unveiled a new rule on Tuesday that will limit all credit card late fees to $8, which is approximately one-quarter of the average late fee amounting to $32. This is the most recent initiative from the White House aimed at addressing what it refers to as “junk fees,” which are extra charges that can inflate the final cost of products.

The new regulations from the Consumer Financial Protection Bureau will establish a maximum late fee of $8 for most credit cards, or mandate that banks justify any fee exceeding $8. This initiative is projected to save Americans up to $10 billion annually, according to the agency.
Following President Joe Biden’s promise in his 2023 State of the Union address to eliminate junk fees, the push is now being made. Excessive charges from junk fees are a significant source of revenue for businesses across various industries, with consumers collectively paying around $90 billion each year, according to the White House.
“In credit cards, as in many sectors of the economy today, consumers face unnecessary fees and must navigate a market controlled by a small number of powerful players,” stated Rohit Chopra, the CFPB director.

President Joe Biden intended to showcase the proposal and other initiatives to lower costs for Americans at a meeting of his competition council on Tuesday.
Biden is establishing a new “strike force” to address illegal and unfair pricing in various sectors such as groceries, prescription drugs, health care, housing, and financial services. The Justice Department and the Federal Trade Commission will lead the strike force, as stated in a White House announcement.

Amidst the ongoing high inflation, which has decreased from its peak of over 9% in June 2022, the push is being made. Consumers are currently facing a 25% increase in grocery prices compared to pre-pandemic levels, along with higher expenses for rent and cars.

“President Biden is committed to long-term efforts to reduce prices for American consumers,” stated Lael Brainard, the National Economic Council director, during a conference call discussing the strike force.