By Gaby Blanco, Rafael Medina*
Feb 23, 2024, 12:14 PM EST
As he enters the final year of his first term, President Biden is delivering on one of his most important promises: saving American families money on everyday expenses. The Biden administration is accomplishing this by taking important steps to reduce and eliminate junk fees that are unnecessarily imposed on various transactions.
Junk rates are those excessive, unavoidable or surprise charges that inflate prices. They occur in a variety of industries, such as airlines, banks, health plans, and even tickets to concerts and sporting events.
These fees are not just a hassle when completing transactions; They can add more than 30 percent to the total cost of an order, and cost Americans billions of dollars a year. They are especially a danger to young people, who have less experience with financial services and may fall victim to predatory junk fees like those commonly associated with college-sponsored financial products.
How many of you have seen reasonable prices promoted only to realize that the rates put them out of reach? It happens to us all the time, but the Biden administration is taking important steps to leave this reality in the past.
President Biden has led his administration to take action against the greedy interests of large corporations for imposing these hidden and unfair fees. For example, the Federal Trade Commission (FTC) proposed a rule that would help consumers have access to accurate and direct information about the total costs of the goods and services they purchase. If approved, the rule would require companies to be transparent about fees associated with live events, hotels, delivery apps, transportation (such as airlines, and car rentals and sales), telecommunications, home rentals, and education, among others. others. The Consumer Financial Protection Bureau (CFPB) has also taken action, combating unfair late payment charges on student loans, auto loans, and payday loans. In 2023, the CFPB proposed a rule that would limit credit card late payment fees to just $8. The agency estimates this rule could save consumers up to $9 billion a year in overall fees.
But you don’t have to wait years for these measures to translate into savings in your pocket: President Biden’s fight against junk rates is already giving results. The CFPB obtained $140 million in refunds to consumers from companies that charged illegal junk fees, such as surprise overdraft fees. Additionally, the CFPB proposed a rule that would limit overdraft fees, which are often highly profitable, at larger financial institutions. This rule could save households up to $3.5 billion a year in fees.
Biden also worked with Democrats to sign legislation that will make other savings permanent. Thanks to the Inflation Reduction Act, a family of four could save up to $23,000 by reducing the costs of home energy, new vehicles, health plans and prescription drugs.
Large corporations have been taking advantage of consumers like you and me for years. By using the power of the executive branch to combat these junk fees, President Biden can help us all save hundreds of dollars a month. Biden has shown that he is not afraid of special interests, and the ones who will gain from these actions will be all of us.
Rafael Medina
is director of media relations for the Center of American Progress. Gaby Blanco
is a constituency media associate for the Center for American Progress.