Biden administration wants to cut credit card late fees to $8

 

Biden administration wants to cut credit card late fees to $8

The White House announced Wednesday that the Biden administration is set to propose a rule that reduces credit card late fees from about $30 to $8, saving consumers up to $9 billion annually.

The Consumer Financial Protection Bureau (CFPB) rule and other actions — such as the White House urging Congress to pass a bill to combat entertainment, utility, and travel fees that hurt many consumers — will be announced at the fourth meeting of the President's Competition Board. These actions build on President Biden's efforts to eliminate or reduce unwanted, hidden, or unexpected fees customers face.

"We're concerned that credit card companies are hoping consumers will be a day or two late, so they can pay the fee," said Rohit Chopra, director of the CFPB. "While it may be fair to charge customers for the additional costs incurred by credit card companies, that's not what we're seeing here."

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

Biden urged we focus on cutting unwanted charges through an executive order issued in October.

He would also call on Congress to pass the Spam Prevention Act, which is also set to eliminate four types of unwanted fees. This charge includes fees for concerts, sporting events, and entertainment in excess on the Internet and early termination fees for television, telephone, and Internet services.

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

Other unwanted fees include resort and destination surprise fees and airline fees for families to sit with young children.

"Separating parents from children is not good for anyone involved, nor should it be something families have to pay more to achieve," said Brian Deese, director of the National Economic Council.

"These fees can be incredibly frustrating for average Americans who must travel or are just seeking to engage in practical ways in our economy, such as accessing Internet services," added Dease.

Despite that, Dease indicated that he doesn't expect Congress to push for action on the unwanted charges at Biden's meeting with House Speaker Kevin McCarthy (R-Calif.), scheduled for Wednesday.

The competition board is expected to meet just hours before the meeting with McCarthy.

Other actions to be announced Wednesday will include the Commerce Department's National Telecommunications and Information Administration (NTIA) issuing a report assessing barriers to competition in the existing mobile app store ecosystem.

The report targets tech 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, especially the app store model, is harmful to consumers and developers. Our report shows that the app market is largely controlled by two companies, Apple and Google. NTIA Director Alan Davidson said Their practices and policies impede a competitive application environment.