Congress Could Swipe Your Credit Card Reward Points
A plot to kill credit card reward points has bipartisan buy-in, with lawmakers framing the effort as an attempt to curb still-stubborn inflation.
Don’t bank on it.
Sens. Dick Durbin (D–Ill.) and J.D. Vance (R–Ohio) are two of the leading sponsors of the Credit Card Competition Act, which would artificially cap so-called swipe fees charged by credit card companies such as Visa, Mastercard, and American Express. Those fees, which range from about 1.2 percent to over 3 percent of the transaction, cover the credit providers’ overhead costs, including fraud protection. They also fund the reward programs that many credit cards now offer as consumer incentives, where every dollar spent translates into points that can be redeemed for flights, free stuff, or cold hard cash.
Even though swipe fees amount to just pennies on the dollar, they add up to big bucks fast because Americans use their credit cards a lot—150 million times per day in 2022. All those swipes allowed Visa and Mastercard, the two networks that handle the majority of transactions, to collect more than $93 billion in fees that year, according to the senators pushing the reforms.
Durbin, Vance, and other advocates for limiting swipe fees argue those higher costs are ultimately passed on to consumers. They’re probably right about that. But their proposal, which would cap those fees and give the Federal Reserve the power to force credit card companies to change how rewards programs are structured,
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