Wouldn’t you know it: a few Democrats and Republicans are finally coming together on something.
But it doesn’t deal with crime, immigration, or the impeachment threat of the week.
No, no. That would be too much work.
Some congresspeople proposed legislation that could very well affect our credit card rewards.
Senators Dick Durbin (Democrat – Illinois) and Roger Marshall (Republican – Kansas) proposed the Credit Card Competition Act. It could head to the floor as soon as this upcoming week. A couple more Democrats and Republics hopped on the bandwagon.
In a nutshell, it aims to reduce help swipe fees businesses pay each time they process a transaction with a credit card. Forbes says these fees range between 1.5% and 3.5%. (American Express is generally regarded as one of the higher-ticket swipe chargers.) It’ll allegedly promote more competition in the credit card processor arena.
More competition = lower prices. In theory. I’m generally in favor of such motions.
All of this, of course, will ultimately benefit consumers.
Mmmhmm.
When is the last time banks and retailers really passed down the savings to their consumers? They aren’t exactly known for saying, You know, people have been paying higher prices. We’re making more money! But, hey, let’s charge less — and make less! Because we’re just that nice.
Come on.
Fees Help Pay for Rewards
Swipe and other fees help pay for the credit card rewards you and I enjoy. The logical thought is that if banks (credit card issuers) take a hit on credit card fees, reward programs will drastically be reduced — or eliminated altogether.
“Yeah, But Pay With Your Debit Card!”
The world is mainly going cashless — and cards have become the preferred way to pay.
One school of thought is that credit card providers will be less likely to lend if the bill passes. So, some people will resort to debit cards. You know, those automatically take cash out of your bank account — even if the charge is fraudulent.
Recommended Reading: “Congressional Bill Cracking Down On Credit Card Rewards Gets Re-Introduced” by Gary Leff
Not Everyone Plays the Credit Card Hobby Like We Do
Perhaps you’re like me and enjoying getting the latest and greatest credit cards because they offer incredible welcome bonuses, perks/features, etc. You might get several credit cards a year.
But most people I know use basic cash back or airline cards. They hold one or two cards. That’s it. They’re not points and miles whackos like me (and possibly you. That’s OK!)
A good friend’s elderly dad uses the Citi® Double Cash Card – 18 month BT offer card because it earns 2% Thank You points on every eligible purchase. He converts those to cashback. He doesn’t need anything flashy. He wanted one card and was delighted with 2%.
That 2% might be reduced to 1%. Or 0%.
Others like using their no-annual-fee or sub-$100 annual fee airline credit cards to earn some miles for a trip.
Those earnings would likely be reduced substantially.
Recommended Reading: “A Proposal to Crush Rewards Credit Cards… and Airlines… is Introduced” by Cranky Flier
A National Defense Concern?!
Here’s where it gets crazier.
Durbin, Marshall, and their toadies want this as an amendment to the National Defense Authorization Act. Last year’s NDAA included items such as:
- “authorizes the procurement of various items, including destroyers and aircraft”
- “requires the Army and the Navy to jointly carry out a pilot program to evaluate the feasibility of using data recorders to monitor the operation of military tactical vehicles”
- “modifies inventory requirements for various Air Force programs”
Yes, credit card swipe fees play an important part in national defense. Goodness gracious.
It’s almost like they want to sneak this in there so no one notices. Because they know it’s — to use one of President Biden’s favorite words — malarkey.
Also worth mentioning: the House of Representatives had their own clown show of the National Defense Authorization Act last week — but at least they seemed to stick to issues that actually kind of somehow involve defense and the military. Not credit card swipe fees.
Here’s Where You Can Come In
The website Hands Off My Rewards automatically generates and sends a letter to your congressional representatives. You enter your name, address, and phone number. There’s also the option to add a personal message. I wrote something like “credit card rewards help my family save money on everyday expenses and take trips which we otherwise couldn’t afford.”
If you don’t want your credit card rewards put in jeopardy, tell your representatives you don’t want the Credit Card Competition Act attached to the NDAA.
Do I Think the Credit Card Competition Act Will Pass?
On its own, I don’t think so.
Most politicians vote along party lines.
Given that Dick Durbin originally introduced the bill, I can see a bunch of Democrats supporting it. Some Republicans jumped in later in the game — but I don’t think their fellow GOP members would back it.
But with the bill snuck into the National Defense Authorization Act? Maybe.
And the NDAA has passed every year for, like, sixty years or something. That’s where this could get dicey.
That said, I believe that if the Senate passes the NDAA this week, it has to go back to the House.
“Of Course, a Credit Card Salesman Like You Is Scared of the Bill Passing!”
Yes, this blog earns commissions from some credit card referrals. We disclose that at the top of every post.
Will the blog lose some income if credit card affiliate programs are adversely affected by the Credit Card Competition Act (or something else down the road)? Of course. Enough to put us out of business?
Nah. You’re stuck with me.
Final Approach
The Credit Card Competition Act is something that sounds good in theory but could end up affecting banks’ credit practices. Credit card reward programs would likely be negatively impacted.
If you want to tell your congressional representatives you don’t like this bill — and/or the fact it’s attached to a national defense bill — drop them a line through Hands Off My Rewards .
Comments Section Closed
Because this is an inherently political issue and comments usually go (way, way, way) off-track, I’m keeping the Comments section closed on this one.
If you have something you really want me to hear, please get in touch!
Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
