Biden's 2025 Plan to Slash Credit Card Late Fees by 75% – Save Big in 2025

President Biden is taking bold steps in 2024 to protect consumers from unfair financial burdens by targeting excessive credit card late fees and urging Congress to eliminate costly 'junk fees' across multiple industries.

Highlights of the Proposal

• Credit card late fees could drop by approximately 75%, from an average of nearly $30 to just $8.
• The initiative is part of a wider effort to combat unfair market practices and promote competition.
• Financial institutions have expressed concerns, arguing the proposal might inadvertently harm consumers.

In a move aligned with the Biden administration’s commitment to consumer protection, the Consumer Financial Protection Bureau (CFPB) introduced a proposed rule aiming to reduce the $12 billion annual cost American families pay in credit card late fees.

This proposal caps monthly late penalties at 25% of the minimum payment and closes loopholes that previously allowed fees to increase with inflation.

Industry Response

The American Banking Association has raised objections, citing a lack of required consultation with smaller banks and credit unions before the proposal’s release.

Additionally, the Bank Policy Institute warns that the changes could increase overall credit costs and reduce credit availability, potentially impacting consumers negatively.

Broader Crackdown on Hidden Fees

Biden’s administration has already taken steps to ban surprise overdraft fees and improve transparency in airline ticket pricing, resulting in significant savings for consumers.

Now, the administration is pushing for the Junk Fee Prevention Act, which aims to:

• Limit excessive online fees for event tickets, which can add over 20% to the ticket price.
• Ban airline seat fees that separate families with young children.
• Eliminate steep early termination fees for TV, phone, and internet services.
• Prohibit surprise resort and destination fees, which many hotel guests have reported paying.

These measures are designed to expose the true cost of services, helping consumers make better-informed decisions and fostering a more competitive marketplace.

Part of a Larger Competition Initiative

This fee crackdown is a key component of President Biden’s broader strategy to enhance competition and reduce market concentration across the U.S. economy.

Since taking office, the administration has ramped up antitrust enforcement, with agencies like the Federal Trade Commission and Department of Justice actively challenging mergers and unfair business practices.

Alongside the late fee reforms, the administration also released a report advocating for fairer conditions for mobile app developers and greater consumer control over devices.

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