Business groups hit back at Biden administration's effort to cap credit card late fees
The Biden administration is seeking to impose a new limit on the typical credit card late fee, but the consumer credit and banking industry warns the change could ultimately affect other consumers in the form of higher interest rates.
The Biden administration is seeking to impose a new limit on the typical credit card late fee, but the consumer credit and banking industry warns the change could ultimately affect other consumers in the form of higher interest rates.
The Consumer Financial Protection Bureau said in a release Tuesday that a proposed $8 cap for a typical late fee would help save consumers a cumulative $10 billion.
“For over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers,” CFPB Director Rohit Chopra said. “Today’s rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines.
President Joe Biden has made targeting "junk" fees a major focus of his administration. Earlier Tuesday, he announced the formation of a task force targeting unfair and illegal pricing schemes.
But the credit card industry and other financial associations are already hitting out at the CFPB's proposed new rule, saying it could lead to unintended consequences for consumers.
Rating: 5