White House seeks to lower U.S. credit card late fees, app charges
Doucefleur

The White House will announce a new effort to drive down credit card late fees and cut prices that Apple (NASDAQ:AAPL) and Google parent Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) can charge on mobile app stores in a campaign to foster competition in consumer markets, Reuters reported Wednesday, citing government officials.
Credit card stocks have dropped in premarket trading. Synchrony Financial (NYSE:SYF) slid 10%, Bread Financial (NYSE:BFH) -9.2%, Capital One Financial (NYSE:COF) -5.0%, Discover Financial (NYSE:DFS) -3.1%. American Express (NYSE:AXP), however, in only down 0.9%.
In addition, President Joe Biden plans to urge Congress to prohibit hidden "junk fees" and penalties that the Consumer Financial Protection Bureau says are infiltrating retail services across industries.
The CFPB proposed on Wednesday a rule to ban "excessive" fees for late payments on credit card bills, a move that could save consumers as much as $9B a year, the agency said. The rule would cap a regulatory threshold at $8. After a public comment period, the rule could take effect in 2024, CFPB Director Rohit Chopra said.
"Over a decade ago, Congress banned excessive credit card late fees, but companies have exploited a regulatory loophole that has allowed them to escape scrutiny for charging an otherwise illegal junk fee," he said.
Credit card companies currently charge as much as $41 for each missed payment, the CFPB said. Even if a cardholder misses a payment due date by hours, they can be charged fees that far exceed the company's cost to collect late payments, it said. The proposed rule would also cap the late fees at 25% of the required minimum payment and to end the automatic annual inflation adjustment.
Also on Wednesday, the White House will propose regulations to stop airlines from charging family members to be seated next to children age 13 or younger.
Dear readers: We recognize that politics often intersects with the financial news of the day, so we invite you to click here to join the separate political discussion.
The proposed rule comes after the CFPB in June started investigating credit card companies' late fee policies.