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Biden Administration Caps Credit Card Late Fees at $8, Aiming to Save Consumers $10 Billion Annually

The new rule targets the largest credit card issuers and is expected to face pushback from the banking industry.

President Joe Biden speaks in the East Room of the White House, Feb. 23, 2024, in Washington. Biden is forming a new "strike force" to crack down on illegal and unfair pricing.

Overview

  • President Joe Biden's administration has finalized a rule to cap credit card late fees at $8, a significant reduction from the current average of $32.
  • The Consumer Financial Protection Bureau (CFPB) estimates the new rule will save consumers approximately $10 billion annually in late fees.
  • The rule applies to the largest credit card issuers with over 1 million open accounts, covering more than 95% of outstanding card balances.
  • Critics argue that the cap may lead to unintended consequences, such as higher interest rates and reduced access to credit for consumers.
  • The banking industry is expected to push back against the CFPB's new rule, with potential legal challenges anticipated.