President Biden’s recent move to combat what he calls “junk fees” and “shrinkflation” is being heralded by some as a win for consumers. The administration announced plans to tackle excessive fees across various sectors, including the capping of late payment charges on credit cards at $8. This initiative follows Biden’s promise to eliminate such fees, made in his 2023 State of the Union address.
The Consumer Financial Protection Bureau (CFPB) has unveiled regulations to cap most credit card late fees at $8, significantly lower than the average late fee of $32. This measure is expected to save Americans up to $10 billion annually, according to estimates from the agency. These efforts are part of a broader campaign to address the prevalence of excessive fees, which the White House claims cost consumers around $90 billion each year.
However, amidst these efforts, questions have been raised about the underlying reasons behind the surge in credit card usage among Americans. Critics point to the unprecedented levels of credit card debt, which surpassed $1 trillion for the first time under the Biden administration.
Some have suggested that if Biden can forgive student loans, why not credit card debt, especially considering the strain many households are experiencing due to inflation and rising costs of living?
Criticism of the administration’s focus on late fees also highlights broader concerns about economic policies and priorities. Some argue that a stronger economy would alleviate the need for individuals to rely on credit cards for essential expenses like groceries and fuel. Others question the timing and efficacy of such measures, suggesting they could have unintended consequences, such as increased interest rates or annual fees on credit cards.
Amidst the debates, credit card debt and late fees have emerged as significant issues for voters leading up to the 2024 elections. The administration’s response to these concerns, along with its broader economic policies, will likely remain central to the political discourse in the coming months.
