Home » Business » New $8.00 USD Late Fee Limit for Credit Cards Approved by Biden Administration to End Junk Charges

New $8.00 USD Late Fee Limit for Credit Cards Approved by Biden Administration to End Junk Charges

In the United States, more than 45 million people are charged a late fee on their credit card payments. This was confirmed by the Consumer Financial Protection Bureau (CFPB), who noted that debts exceeded the record figure of one trillion dollars.

In this sense, the Biden Administration has approved new regulations to establish a limit of $8.00 USD on late fees. This provides relief to residents and eliminates the famous “junk charges.”

Rohit Chopra, director of the CFPB, explained in a statement what has been happening for many years with the credit card giants.

It turns out that “they have been exploiting a loophole to reap billions of dollars in junk fees from American consumers,” he said.

The official also said that large card companies have used inflation to improve their own results when they increase rates for borrowers. So the current rule would put an end to all these types of irregularities.

What is the $8.00 USD limit about?

According to the CFPB, the new rule will only apply to large financial companies. We are talking about those who have more than one million active accounts, representing 95% of clients who have credit card debt.

In fact, the bureau estimates that families will save nearly $10 billion a year.

It is valid to clarify that the regulations come into force 60 days after their publication in the Federal Register. Therefore, the limit of $8.00 USD for late payments could begin to apply from June 1st.

But, as expected, this new measure has also gained detractors within banking institutions. An example is the United States Chamber of Commerce, which threatened to sue to prevent the measure from taking effect.

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2024-03-13 03:24:45
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