Biden slashing credit card late fees to $8 in latest crackdown on junk fees

Published

2 years ago

March 11, 2024

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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 Bureaus 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 brought in roughly $14 billion in credit card late fees a year.

In credit cards, like so many corners of the economy today, consumers are beset by junk fees and forced to navigate a market dominated by relatively few, powerful players who control the market, said Rohit Chopra, director of the bureau, in a statement.

President Biden planned to highlight the proposal along with other efforts to reduce costs to Americans at a meeting of his competition council on Tuesday.

The Democratic president is forming a new strike force to crack down on illegal and unfair pricing on things like groceries, prescription drugs, health care, housing and financial services.

The strike force will be led by the Justice Department and the Federal Trade Commission, according to a White House statement.

The Biden administration has portrayed the White House Competition Council as a way to save people money and promote greater competition within the US economy.

The White House Council of Economic Advisers produced an analysis indicating that the Biden administrations efforts overall will eliminate $20 billion in annual junk fees.

The analysis found that consumers pay about $90 billion a year in junk fees, including for concerts, apartment rentals and auto dealers.

The effort appears to have done little to help Biden politically ahead of this years presidential election.

Just 34% of US adults approve of Bidens economic leadership, according to a new survey by The Associated Press-NORC Center for Public Affairs Research.

Sen. Tim Scott, R-South Carolina, criticized the CFPB cap on credit card late fees, saying that consumers would ultimately face greater costs through higher interest rates and less access to credit.

It will decrease the availability of credit card products for those who need it most, raise rates for many borrowers who carry a balance but pay on time, and increase the likelihood of late payments across the board, Scott said.

Americans held more than $1.05 trillion on their credit cards in the third quarter of 2023, a record, and a figure certain to grow once thefourth-quarter datais released by the Federal Deposit Insurance Corp. next month.

Those balances are now carrying interest on them, which is the highest it has been since the Federal Reserve started tracking the data back in the mid-1990s.

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Further, more Americans are falling behind on theircredit card debtsas well.

Delinquency ratesat the major credit card issuers such as American Express, JPMorgan Chase, Citigroup, Capital One and Discover have been trending upward for several quarters.

Some analysts have become concerned Americans, particularly poorer households hurt by inflation, might be taking on too much debt.

Overall, the consumer is credit healthy. However, the reality is that there are starting to be some significant signs of stress, said Silvio Tavares, president and CEO of VantageScore, one of the countrys two major credit scoring systems, in an interview last month.

The growth of the credit card industry is partly whyCapital One announced it would buy Discover Financiallast month for $35 billion.

The two companies, which are two of the largest credit card issuers, are also two companies whose customers regularly carry a balance on their accounts.

This is not the first time policymakers have weighed in on credit card fees.

Congress in 2010 passed the CARD Act, which banned credit card companies from charging excessive penalty fees and established clearer disclosures and consumer protections.

The Federal Reserve issued a rule in 2010 that capped the first credit card late fee at $25, and $35 for subsequent late payments, and tied that fee to inflation.

The CFPB, which took over the regulation of the credit card industry from the Fed after it was established, is proposing going further than the Fed.

The bureaus proposal is similar in structure to what the bureau announced in January when it proposedcapping overdraft feesto as little as $3.

In that proposed regulation, banks would be required to either accept the bureaus benchmark or show regulators why they should charge more, a method that few bank industry executives expect to use.

Biden has madethe elimination of junk feesone of the cornerstones of his administrations economic agenda heading into the 2024 election.

Fees that banks charge customers have been at the center of that campaign, and the White House directed government regulators last year to do whatever is in their power to further curtail the practice.

In another move being highlighted by the White House, the Agriculture Department said it has finalized a rule to stop what it deems to be deceptive contracts by meat processors and to ban retaliation against small farmers and ranchers that work together in associations.

Entertainment

Netflix takeover of Warner Bros ‘could be a problem’, Donald Trump says

Published

1 hour ago

December 8, 2025

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Netflix takeover of Warner Bros 'could be a problem', Donald Trump says

Donald Trump has said he will be “involved” in the decision on whether Netflix should be allowed to buy Warner Bros, as the $72bn (£54bn) deal attracts a media industry backlash.

The US president acknowledged in remarks to reporters there “could be a problem”, acknowledging concerns over the streaming giant’s market dominance.

Crucially, he did not say where he stood on the issue.

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It was revealed on Friday that Netflix, already the world’s biggest streaming service by market share, had agreed to buy Warner Bros Discovery’s TV, film studios and HBO Max streaming division.

The deal aims to complete late next year after the Discovery element of the business, mainly legacy TV channels showing cartoons, news and sport, has been spun off.

But the deal has attracted cross-party criticism on competition grounds, and there is also opposition in Hollywood.

The Writers Guild of America said: “The world’s largest streaming company swallowing one of its biggest competitors is what antitrust laws were designed to prevent.

“The outcome would eliminate jobs, push down wages, worsen conditions for all entertainment workers, raise prices for consumers, and reduce the volume and diversity of content for all viewers.”

Republican Senator, Roger Marshall, said in a statement: “Netflix’s attempt to buy Warner Bros would be the largest media takeover in history – and it raises serious red flags for consumers, creators, movie theaters, and local businesses alike.

“One company should not have full vertical control of the content and the distribution pipeline that delivers it. And combining two of the largest streaming platforms is a textbook horizontal Antitrust problem.

“Prices, choice, and creative freedom are at stake. Regulators need to take a hard look at this deal, and realize how harmful it would be for consumers and Western society.”

Paramount Skydance and Comcast, the parent company of Sky News, were two other bidders in the auction process that preceded the announcement.

The Reuters news agency, citing information from sources, said their bids were rejected in favour of Netflix for different reasons.

Paramount’s was seen as having funding concerns, they said, while Comcast’s was deemed not to offer so many earlier benefits.

Paramount is run by David Ellison, the son of the Oracle tech billionaire Larry Ellison, who is a close ally of Mr Trump.

The president said of the Netflix deal’s path to regulatory clearance: “I’ll be involved in that decision”.

On the likely opposition to the deal. he added: “That’s going to be for some economists to tell. But it is a big market share. There’s no question it could be a problem.”

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