In his State of the Union address tonight, President Biden highlighted his administration’s proposals to place price controls on consumer fees, including fees charged by banks for late payments. “My administration is also taking on ‘junk’ fees, those hidden surcharges too many businesses use to make you pay more,” he said. “We’ve reduced exorbitant bank overdraft fees, saving consumers more than $1 billion a year. We’re cutting credit card late fees by 75%, from $30 to $8.” The latter action came in a proposal last week from the CFPB to eliminate a longstanding safe harbor that banks of all sizes rely upon when setting late fees on credit card payments.
Biden repeated a misleading message about overdraft and late payment fees being hidden. As ABA has pointed out on numerous occasions, the fees “are highly regulated and fully disclosed to consumers by law.” Moreover—unlike resort fees or ticket surcharges that Biden also discussed—consumers can choose to avoid them while using bank accounts.
In outreach to media ahead of the speech, ABA’s public relations team shared several key points providing context to Biden’s framing of his plans. “This proposal could actually reduce credit availability and harm the millions of Americans who pay their credit card bills on time,” the Wall Street Journal quoted ABA as saying. ABA reinforced the cost of adding price controls to late fees for consumers who pay on time and the role an appropriate late payment fee plays in incentivizing on-time payments.
