Biden Admin Proposes to Cap Credit Card Late Fees, Combating Racial Disparities

By Stacy M. Brown | The Washington Informer | Word In Black This& post& was originally published on& The Washington Informer (WIB) – In a move to confront racial disparities in credit terms, the Biden administration has unveiled a proposal to cap credit card late fees at $8, challenging the longstanding issue of “junk fees” that disproportionately affect people of color and minorities. The ambitious plan, announced Tuesday, aims not only to alleviate immediate financial burdens for consumers but also addresses the systemic inequities faced by those residing in predominantly Black or African American and Hispanic or Latino communities. Recent studies have shed light on the stark differences in credit terms, revealing that cardholders in these minority-majority neighborhoods face lower credit limits and higher interest rates than their counterparts in predominantly white areas, even considering factors like credit scores and income. One analysis of a diverse sample of cardholders uncovered troubling trends, including credit limits for those in majority Black and Hispanic zip codes, which were, on average, $3,412 and $4,285 lower, respectively. Also, interest rates for individuals in these zip codes were, on average, approximately 1.3 and 1.4 percentage points higher, respectively. Beyond the immediate financial relief for consumers,...