In a significant move to rein in excessive fees, the Biden administration has announced plans to limit what banks can charge for late credit card payments. The Consumer Financial Protection Bureau (CFPB) proposed capping late fees at $8, a drastic reduction from the current average of $31.
“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 CFPB Director Rohit Chopra.
The rule is expected to save American families $10 billion annually, with 45 million cardholders charged late fees each year.
Why it matters
*Americans held over $1.05 trillion in credit card debt in Q3 2023, a record high expected to increase with Q4 data.
*Credit card interest rates are at their highest since the Federal Reserve began tracking in the mid-1990s.
*Delinquency rates on credit card payments are rising among major issuers like American Express, JPMorgan Chase, Citigroup, Capital One, and Discover.
*Economic analysts express concern that especially lower-income households are accumulating excessive debt due to inflation.
*Silvio Tavares, CEO of VantageScore, noted signs of increasing financial stress among consumers despite general credit health.
*The merger between Capital One and Discover Financial, valued at $35 billion, reflects the growing credit card industry.
Scrutiny on private equity in healthcare
Separately, the Justice Department, Federal Trade Commission (FTC), and Department of Health and Human Services (HHS) have launched a joint inquiry into the “impact of corporate greed in health care.” The focus is on transactions involving private equity, aiming to understand how such deals may increase consolidation, threaten patient care, and drive up costs.
“The inquiry seeks to understand how private equity deals “may increase consolidation and generate profits for firms while threatening patients’ health, workers’ safety, quality of care, and affordable health care for patients and taxpayers,” according to officials.
Interagency ‘strike force’ formed
The administration also unveiled an interagency “strike force” led by the Justice Department and FTC to combat illegal corporate behavior that inflates prices through anticompetitive or fraudulent practices.
“The moves to address rising costs come as Democratic President Joe Biden and his allies try to change views among the many American voters unhappy with his economic stewardship,” the report stated.
Additional measures
Among other measures, the administration will finalize a rule giving ranchers and farmers more leverage when negotiating contracts with meat-packers. Biden is set to highlight these steps during the sixth meeting of the Competition Council, which he created by executive order to stop anticompetitive practices across various sectors.
“Biden has successfully pressured companies such as Airbnb and Live Nation to limit junk fees – or extra charges – that customers pay when booking concert tickets, hotels and airfares,” the report noted.
Challenges ahead amidst public skepticism
Despite these initiatives, President Joe Biden faces challenges in improving public perception of his economic management, with only 34% of US adults approving of his economic leadership. The upcoming measures, however, underscore his administration’s dedication to reducing living costs and promoting fair competition across various sectors.
(With inputs from agencies)
“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 CFPB Director Rohit Chopra.
The rule is expected to save American families $10 billion annually, with 45 million cardholders charged late fees each year.
Why it matters
*Americans held over $1.05 trillion in credit card debt in Q3 2023, a record high expected to increase with Q4 data.
*Credit card interest rates are at their highest since the Federal Reserve began tracking in the mid-1990s.
*Delinquency rates on credit card payments are rising among major issuers like American Express, JPMorgan Chase, Citigroup, Capital One, and Discover.
*Economic analysts express concern that especially lower-income households are accumulating excessive debt due to inflation.
*Silvio Tavares, CEO of VantageScore, noted signs of increasing financial stress among consumers despite general credit health.
*The merger between Capital One and Discover Financial, valued at $35 billion, reflects the growing credit card industry.
Scrutiny on private equity in healthcare
Separately, the Justice Department, Federal Trade Commission (FTC), and Department of Health and Human Services (HHS) have launched a joint inquiry into the “impact of corporate greed in health care.” The focus is on transactions involving private equity, aiming to understand how such deals may increase consolidation, threaten patient care, and drive up costs.
“The inquiry seeks to understand how private equity deals “may increase consolidation and generate profits for firms while threatening patients’ health, workers’ safety, quality of care, and affordable health care for patients and taxpayers,” according to officials.
Interagency ‘strike force’ formed
The administration also unveiled an interagency “strike force” led by the Justice Department and FTC to combat illegal corporate behavior that inflates prices through anticompetitive or fraudulent practices.
“The moves to address rising costs come as Democratic President Joe Biden and his allies try to change views among the many American voters unhappy with his economic stewardship,” the report stated.
Additional measures
Among other measures, the administration will finalize a rule giving ranchers and farmers more leverage when negotiating contracts with meat-packers. Biden is set to highlight these steps during the sixth meeting of the Competition Council, which he created by executive order to stop anticompetitive practices across various sectors.
“Biden has successfully pressured companies such as Airbnb and Live Nation to limit junk fees – or extra charges – that customers pay when booking concert tickets, hotels and airfares,” the report noted.
Challenges ahead amidst public skepticism
Despite these initiatives, President Joe Biden faces challenges in improving public perception of his economic management, with only 34% of US adults approving of his economic leadership. The upcoming measures, however, underscore his administration’s dedication to reducing living costs and promoting fair competition across various sectors.
(With inputs from agencies)