Credit card late fees slashed by Biden rule, saving Americans billions

Credit card late fees slashed by Biden rule, saving Americans billions

The Consumer Financial Protection Bureau announced a new rule on Tuesday that will lower the average credit card late fee from $32 to $8, a move that will benefit millions of Americans who struggle to pay their bills on time. The rule, which will take effect in mid-May, will also eliminate the automatic inflation adjustment that allowed credit card issuers to increase their fees every year.

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The CFPB said the rule will close a loophole in a 2009 law that was supposed to limit excessive credit card late fees, but was exploited by the industry to charge consumers more than $14 billion annually. The agency estimated that the rule will save American families $10 billion per year, or $220 per person for the 45 million people who incur late fees.

 

The rule is part of President Joe Biden’s agenda to promote fair and competitive markets and to reduce the burden of “junk fees” on consumers. Biden praised the rule in a meeting with his Competition Council on Tuesday and said he will also launch a new Strike Force to crack down on other practices that keep prices high, such as anti-competitive behavior in the app store, prescription drug, and health care markets.

In this file photo, President Joe Biden and Lael Brainard, assistant to the president and director.

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The rule was welcomed by consumer advocates, but opposed by the banking and credit card industry, which warned that it could lead to higher interest rates and less access to credit. The Consumer Bankers Association, which represents major credit card issuers, said the rule’s policy goals were “consumer redistribution, not consumer protection.”

President Joe Biden meets Italian Prime Minister Giorgia Meloni in the Oval Office

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Source : ABC NEWS

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