(USNewsBreak.com) – The Biden Administration has focused on addressing so-called “junk” fees during this term. The blanket term covers charges added to consumers’ bills, significantly inflating them. Purchasers often see the additional charges on airline and concert tickets, but the administration also wants to crack down on late fees for credit cards.
On Tuesday, March 5, President Joe Biden announced the launch of an initiative aimed at lowering costs for Americans “by taking action to end corporate rip-offs and other unfair practices” that resulted in inflated prices. The Justice Department (DOJ) and Federal Trade Commission (FTC) will co-chair the Strike Force on Unfair and Illegal Pricing. The goal is to save consumers billions of dollars a year.
The Biden administration finalized a rule Tuesday to limit late payment fees issued by credit card companies. The White House touted the new rule as part of a wider initiative to crack down on “junk fees.” https://t.co/6b9WJCZkNb
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One way the administration plans to accomplish that is by tackling credit institutions’ practice of tacking on late fees. According to the fact sheet, the average penalty is $32. The strike force wants to reduce this to a maximum of $8, resulting in annual consumer savings of at least $10 billion. Broken down by individual accounts, it would represent an average savings of $220 per year per consumer. The Consumer Financial Protection Bureau finalized the rule on March 5.
Republican lawmakers met the initiative with some backlash because they believe that the penalties help to promote fiscal responsibility. For example, Senator Tim Scott (R-SC) opposes the rule and plans to block it using the Congressional Review Act. Several trade groups also align with this viewpoint, saying that taking away the penalty for late payments could lead to increased debts and reduced access to more credit, not to mention lower credit scores.
Yet, consumer advocacy groups sit on the opposite side. According to The Hill, Consumer Reports director of advocacy, Chuck Bell, said in a statement that the credit card companies benefit “at the expense of economically vulnerable families every year,” including those “living paycheck-to-paycheck, low- and moderate-income consumers, and people of color.”
The administration isn’t just looking to tackle credit cards, either. The announcement also singled out cable and internet fees, auto dealer fees, live event ticket surcharges, and apartment rentals as areas of concern.
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