Biden administration wants credit card late fees slashed to $8

The Biden administration proposed a rule that would reduce credit card late fees from roughly to $30 to $8, saving consumers up to $9 billion annually, the White House announced on Wednesday.

The rule from the Consumer Financial Protection Bureau (CFPB), along with other actions — like the White House urging Congress to pass a bill to crack down on entertainment, utility and travel fees that hit many consumers — was announced in the fourth meeting of the President’s Competition Council.

“These unfair fees add up. It’s a basic question of fairness. And with the help of the folks in this room, we’re going to keep building an economy that’s fair, an economy that’s competitive, and an economy that works for everyone,” President Biden said at the meeting.

These actions build on Biden’s efforts to eliminate or limit junk fees, which are hidden or unexpected fees customers face.

“We worry that credit card companies are actually hoping that consumers are a day or two late, so they can cash on fees,” said CFPB Director Rohit Chopra. “While it may be fair to charge customers for extra costs that credit card companies are incurring, that’s not what we see here.”

To come to the $8 figure, Chopra said the CFPB analyzed current costs and found that the number now is five times higher than it needs to be.

Chopra said at the meeting that he expects people will start to see real relief due to these actions next year.

“People want to be able to see the price up front and know what they’re getting and not be surprised for something they can’t even budget for,” he said.

The president agreed, noting that his administration is working to rebuild confidence in the government’s ability to deliver for the American people.

“People have lost faith in government’s ability to deliver, have lost faith in private sector and what they advertise or say they’re delivering, and it’s about just letting people know that we see what’s happening and its totally appropriate to do what we’re doing,” Biden said.

Biden urged a focus on reducing junk fees through an executive order issued in October.

He called on Congress to pass a Junk Fee Prevention Act, which is also set to crack down on four types of junk fees. Those fees include excessive online concert, sporting event and entertainment fees, and early termination fees for television, phone and internet services.

The White House said on Tuesday the administration wants congressional action in these areas because it can be faster than administrative action, which includes the rulemaking process.

The two other types of junk fees include surprise resort and destination fees and airline fees for families to sit with young children.

“Having parents and children separated isn’t good for anyone involved and should not be something that families have to pay extra to achieve,” said Brian Deese, director of the National Economic Council.

“These fees can be incredibly frustrating for typical Americans who have to travel or who are seeking to just engage in practical ways in our economy, like accessing internet services,” Deese added.

Deese noted, though, that he doesn’t anticipate the push for congressional action on junk fees to come up in Biden’s meeting with Speaker Kevin McCarthy (R-Calif.), which is set for Wednesday.

The Competition Council met just hours before the meeting with McCarthy.

Other actions announced on Wednesday included the Department of Commerce’s National Telecommunications and Information Administration (NTIA) releasing a report assessing the barriers to competition in the current mobile app store ecosystem.

The report targets technology companies Apple and Google specifically and will include recommendations to level the playing field for app developers, giving consumers more control.

“The report finds that the current mobile app ecosystem, and especially the current app store model, is harmful to consumers and to app developers. As outlined in our report, the marketplace for apps is largely controlled by two firms, Apple and Google. Their practices and policies hinder a competitive app ecosystem,” said NTIA administrator Alan Davidson.

Updated: 1:48 p.m.

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