Biden Credit Card Fees: What You Need to Know

The Biden administration has proposed changes to credit card fees, which could affect millions of Americans. The proposed changes aim to protect consumers from unfair fees and practices.

Credit card companies currently charge various fees, including late fees, foreign transaction fees, and balance transfer fees. These fees can add up quickly, making it difficult for consumers to pay off their balances.

The proposed changes would limit credit card companies' ability to charge these fees, potentially saving consumers hundreds of dollars per year. For example, a study cited in the article found that consumers could save up to $200 per year by avoiding late fees alone.

The Biden administration is finalizing a new limit on how much credit card companies can charge in late fees, putting the cap at $8.

This cap is expected to save the average American household $220, according to the CFPB. The rule change will take effect 60 days after it is published in the Federal Register.

Late fees have ballooned into a $14 billion industry, representing more than 10% of the $130 billion card issuers charged consumers in interest and fees in 2022. The average late fee charged by large card companies ticked up from $23 in 2010 to $32 in 2022.

Industry groups representing big banks and credit card issuers have opposed the rule, arguing it could force them to raise interest rates they charge consumers. The Consumer Bankers Association predicted that the rule change will "benefit a small minority of frequent late-payers" and pass on their costs to the large majority of cardholders who make their payments on time.

Credit card companies may charge fees above the $8 threshold, but only if they can prove higher fees are necessary to cover their actual collection costs. This new rule is expected to take effect 60 days after it is published in the Federal Register.

The CFPB says the rule will help save the average American household $220. The CFPB's rule is expected to take effect in mid-May and applies to issuers with more than 1 million open accounts.

Late fees have ballooned into a $14 billion industry, as of 2022, the CFPB said, representing more than 10% of the $130 billion card issuers charged consumers in interest and fees in that year.

Industry groups representing big banks and credit card issuers have opposed the rule, arguing it could force them to raise interest rates they charge consumers.

The credit card late fee industry has ballooned into a $14 billion industry, representing more than 10% of the $130 billion card issuers charged consumers in interest and fees in 2022.

Card issuers were supposed to charge late fees only to recover their costs in collecting the tardy payments, but regulators left a loophole that allowed them to charge excessive fees.

The average late fee charged by large card companies ticked up from $23 in 2010 to $32 in 2022.

Industry groups representing big banks and credit card issuers have opposed capping late fees, arguing it could force them to raise interest rates they charge consumers.

A handful of large banks account for $14 billion in credit card late fees charged to American households every year.

The CFPB's new rule will cap late fees at $8, down from $32, and is expected to take effect in mid-May.

This new rule will help save the average American household $220 per year, according to the CFPB.