The new regulations would would bring the average credit card late fee down from $32.
The Biden administration announced a rule Tuesday to cap all credit card late fees, the latest effort in the White House push to end what it has called junk fees and a move that regulators say will save Americans up to $10 billion a year.
The Consumer Financial Protection Bureau’s new regulations will set a ceiling of $8 for most credit card late fees or require banks to show why they should charge more than $8 for such a fee.
The rule would bring the average credit card late fee down from $32. The bureau estimates banks brings in roughly $14 billion in credit card late fees a year.
President Joe Biden highlighted the proposal along with other efforts to reduce costs to Americans at a meeting of his competition council Tuesday. He’s also forming a new strike force to crack down on illegal and unfair pricing of things like groceries, prescription drugs, health care, housing and financial services.
Biden said at the start of the council meeting that current late fees are generating five times more money than what it costs credit card companies to collect late payments.
“They’re padding their profit margins and charging hardworking Americans more,” Biden said. “It’s a lot of money.“
The president also noted that companies are effectively raising prices by putting fewer potato chips in the bags sold at grocery stores. Even the “Sesame Street” character Cookie Monster has noticed so-called “shrinkflation,” saying on social media that he’s paying more for fewer cookies, Biden said.
The strike force will be led by the Justice Department and the Federal Trade Commission, according to a White House statement.
