Biden Administration Wants Credit Card Late Fees Slashed to $8

President Joe Biden arrives to speak at the Baltimore and Potomac Tunnel North Portal in Baltimore, Md., on Jan. 30, 2023. (Drew Angerer/Getty Images)

The Biden administration wants credit card late fees to be slashed to $8 and for Apple and Google to reduce the amount they charge on their mobile app stores.

White House officials stated that this is part of a larger policy effort to promote competition in consumer markets.

President Joe Biden’s Competition Council announced on Feb. 1 that the Consumer Financial Protection Bureau (CFPB) would propose a rule that would slash “excessive” credit card late fees through use of the Credit CARD Act of 2009.

The president’s Competition Council was created in 2021, when consumer inflation was at a 40-year high.

White House Wants to Ban Late and Hidden Fees

The CFPB plans to reduce typical late fees from roughly $30 to $8 and save consumers as much as $9–12 billion a year.

“When someone misses a credit card payment, even if they paid just a day or two late, or even a few hours, they can be hit with a cascading series of fees,” CFPB director Rohit Chopra told reporters in a Tuesday call.

Chopra labeled such fees as extortionate and far exceed any additional costs that lenders incur.

The new rule could take effect in 2024 after a comment period, but the regulations are expected to be challenged in litigation efforts by industry groups that could block or delay them, said the CFPB director.

The administration further proposed a “Junk Fee Prevention Act” to eliminate hidden “junk fees” and penalties, which the federal consumer watchdog has criticized for penalizing consumers.

Biden will instruct the Department of Transportation to ban airlines from charging parents fees to sit next to children up to 13 years of age and crack down on excessive online concert, sporting event, and other entertainment ticket fees.

The White House said it would disclose on a government dashboard which airlines charge such fees on passengers.

It would also eliminate the exorbitant early termination fees for TV, phone, and internet service that consumers must pay if they want to switch to another provider, along with surprise resort and destination fees on travelers.

The president will urge Congress to pass the Junk Fee Act to put these changes into law and lessen the growing effect that late and hidden fees have on everyday retail services by raising consumer costs across the board.

Commerce Department Urges End to Duopoly Over App Store Options

The Department of Commerce’s National Telecommunications and Information Administration (NTIA) also released a report addressing the barriers to competition by the dominance of Apple and Google over the mobile app market, accusing their smartphone duopoly of driving up costs and limiting innovation.

The report encourages the leveling of the “playing field for app developers and give consumers more control over their devices” and calls for a ban on the requirement that apps makers use the two phone makers’ in-app payments systems.

The NTIA also encouraged greater user control over which applications were available and an end to platform operators’ “self-preference” for their own apps.

An Apple spokesperson wrote to Reuters stating that while the report “acknowledges the importance of user privacy, data security, and user convenience,” some of its conclusions “ignore the investments we make in innovation, privacy, and security.”

Google also disagreed with the report’s findings, explaining that the Android app store “enables more choice and competition than any other mobile operating system,” a spokesperson told Reuters.

Biden Attacks New GOP House Majority Over Tax Plans

Meanwhile, President Biden, who is expected to announce his bid for reelection in the coming weeks, is also preparing to address Congress in his State of the Union later this month.

The president has recently taken the opportunity to criticize the Republican-controlled House of Representatives for refusing to go along with his 2023 tax agenda, accusing them of favoring the wealthy at the expense of the middle class.

Republicans called the president’s accusation false.

“Since the Trump tax cuts, the share of income taxes paid by the top 1 percent has increased. The share paid by the lower quintiles has fallen,” Larry Kudlow, a former economic advisor for presidents Ronald Reagan and Donald Trump. said on Fox Business on Jan. 30,

“So, Mr. Biden’s typical left-wing attack on the wealthy overlooks the fact that the U.S. has the most progressive tax code among the largest country economies and people at the bottom are virtually paying no taxes at all. The bottom 50 percent paid 2.3 percent of all income taxes. The top 50 percent paid 97.7 percent,” Kudlow added.

Under Biden, the average inflation rate has skyrocketed during his first term in office, making things more expensive for millions of Americans.

Debt Ceiling Fight Continues

Biden also attacked Republicans for their refusal to approve an increase in the U.S. debt ceiling unless he agrees on spending cuts to reduce the $31.381 trillion budget deficit, which has risen to three times the total annual revenue of the federal government.

Congress last voted to raise the federal debt ceiling in December 2021.

Secretary of the Treasury Janet Yellen estimated last week that the government would be able pay its bills through early June.

The same day as the announcement, Biden and House Speaker Kevin McCarthy (R-Calif.) met at the White House to start the first round of protracted negotiations regarding the federal borrowing cap.

“Will the Speaker commit to the bedrock principle that the United States will never default on its financial obligations?” wrote Brian Deese, director of the Economic Council, and Shalanda Young, director of the Office of Management and Budget.

“And does he agree with former presidents, including President Trump and Reagan, that it is critical to avoid debt limit brinksmanship?” they added.

McCarthy Promises to Stand Firm in Negotiations With the White House

House Republicans stated that now that the ceiling has been reached, the government must focus on a more fiscally responsible plan to halt the rapid expansion of the national debt.

McCarthy said this week, “I’m not interested in playing political games,” reported Fox News. “I’m coming to negotiate for the American people.”

The House Speaker expressed his plans to discuss a balanced budget in-person with Biden, saying that “every family does it, every business, every state, every county.”

McCarthy told CBS’s “Face the Nation” that his intention would be to come to some sort of “reasonable” agreement with the president.

“We need to sit down together, find common ground, find where we can eliminate the waste, and let’s put our country back on a path where we can balance and get our future brighter than before,” McCarthy said.

“We’re going to work very closely together, and I think you’re going to find us more united than ever before.”

He also said the United States is “not going to default.”

Reuters contributed to this report.