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Is Congress Going to Kill Credit Card Rewards? (www.nerdwallet.com)

submitted 1 year ago by [email protected] to c/[email protected]

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Legislation known as the Credit Card Competition Act, first introduced in Congress in 2022, is described by its sponsors as encouraging “competition in electronic credit transactions.” But if lawmakers end up passing the measure, opponents say it could also torpedo the rich rewards and perks that cardholders have enjoyed for years.

“Will consumers lose? Probably,” wrote Brian Riley, director of the credit advisory service at Mercator Advisory Group, in an August 2022 post to the Mercator blog. “Their reward programs will dry up, just as they did with debit cards.”

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[–] [email protected] 15 points 1 year ago

Actually, that's a fair point. Credit card merchant fees are a significant portion of transactions. VISA gets rich because they charge 1-10% on every single transaction. Holy crap.

My family churns our credit cards to get the absolute maximum rewards possible. Each year, out of probably $75k in purchases on credit cards, we receive about $3k in cash back. That's about 5%. Sure, we're thankful for being able to get some free nights in a hotel and such, but if we weren't paying those fees in the first place, we'd save quite a bit more.

But of course, cost savings are not transferred to consumers these days. Retailers will still charge the same, they'll just give VISA and the big banks less profits.