# Proposed legislation could affect credit card rewards in the US



## GAT (Sep 17, 2022)

A very interesting article in today's The Points Guy (TPG). This is far from becoming reality at the moment, but it's an indication of what some lawmakers from both parties are thinking. 

I have mixed feelings about the proposal because I hear the arguments that credit card reward programs possibly benefit us more affluent card users at the expense of less privileged ones and those that can't qualify for them. not mention the benefits to the big banks. 

Call me a wooly-headed liberal idealist. but i think that TPG's justification that rewards cards enhance their owners' travel experience and quality of life yields only so much mileage (so to speak).









What the Credit Card Competition Act of 2022 could mean for your rewards if passed - The Points Guy


The Credit Card Competition of 2022: Here's where the proposal stands in Congress, and how it could affect credit card rewards.




thepointsguy.com


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## TheCrescent (Sep 18, 2022)

GAT said:


> A very interesting article in today's The Points Guy (TPG). This is far from becoming reality at the moment, but it's an indication of what some lawmakers from both parties are thinking.
> 
> I have mixed feelings about the proposal because I hear the arguments that credit card reward programs possibly benefit us more affluent card users at the expense of less privileged ones and those that can't qualify for them. not mention the benefits to the big banks.
> 
> ...


“Privileged”? I work 60-80 hours a week to earn a living, worked my tail off in school to get in shape for the job market, while others were partying, and see no end in sight to working 60-80 hours a week. My income level certainly was not handed to me on a silver platter, and my friends and family members who work 9-5, Monday through Friday (or less), have an easier life in many respects. But even they weren’t handed anything on a silver platter which the term “privileged” suggests.


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## zephyr17 (Sep 18, 2022)

GAT said:


> A very interesting article in today's The Points Guy (TPG). This is far from becoming reality at the moment, but it's an indication of what some lawmakers from both parties are thinking.
> 
> I have mixed feelings about the proposal because I hear the arguments that credit card reward programs possibly benefit us more affluent card users at the expense of less privileged ones and those that can't qualify for them. not mention the benefits to the big banks.
> 
> ...


I wouldn't worry about it. Lots of legislation is introduced that goes nowhere. Some of it is purely performative, though this appears to have serious intent. Based on the article, I infer it has been bottled up in committee to die, a common practice. It does not appear to have the support of leadership, a requirement to move legislation in the House.


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## jebr (Sep 18, 2022)

This bill, if it gets much traction (which I doubt,) also seems to be a pretty poor way of driving down interchange fees. Banks are still in control of which networks they can choose, and I wouldn't be surprised if some more expensive options come onto the market for banks to choose so they can avoid a reduction in interchange fee revenue.

IMO, the key mechanism that drove down interchange fees on debit cards was the cap on fees for debit cards issued by large banks. That's what would be required to actually drive down interchange fees meaningfully.

I'm skeptical that capping interchange fees would have a meaningful, obvious impact on prices. More likely is that it would give a momentary bump in profit for merchants, and perhaps delay price increases temporarily. Even so, I think the main four credit card networks take advantage of their basically-monopoly status on credit card processing, and it's clear that they don't provide meaningful competition for merchants to get lower interchange fees. The higher interchange fees on higher-end Visa/Mastercards, imo, proves this point: there's no additional cost Visa incurs to process a Visa Infinite card transaction vs. a standard Visa card transaction, but almost all merchants (and/or their credit card processor) will be charged more for the Visa Infinite transaction.


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## zephyr17 (Sep 18, 2022)

More competition would certainly be welcome and would serve to reduce fees, since there would more competition for merchants' business but the size and complexity of the systems unfortunately makes them a "natural" oligopoly, IMHO.


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## GAT (Sep 22, 2022)

TheCrescent said:


> “Privileged”? I work 60-80 hours a week to earn a living, worked my tail off in school to get in shape for the job market, while others were partying, and see no end in sight to working 60-80 hours a week. My income level certainly was not handed to me on a silver platter, and my friends and family members who work 9-5, Monday through Friday (or less), have an easier life in many respects. But even they weren’t handed anything on a silver platter which the term “privileged” suggests.


 I didn't mean to offend you. I certainly honor your work ethic and your success, but I don't see how your point relates to my comment. Please re-read the middle paragraph. I was referring to those persons to whom the banks do not grant the privilege of owning a credit card. Some might argue that the money spent on bonuses and other incentives could be better spent on extending credit to lower income folks. Nut as I said, I have mixed feelings about this.


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## drdumont (Sep 24, 2022)

GAT said:


> I didn't mean to offend you. I certainly honor your work ethic and your success, but I don't see how your point relates to my comment. Please re-read the middle paragraph. I was referring to those persons to whom the banks do not grant the privilege of owning a credit card. Some might argue that the money spent on bonuses and other incentives could be better spent on extending credit to lower income folks. Nut as I said, I have mixed feelings about this.


Lending institutions are not going to extend credit to those who do not have income or credit history which will qualify them. Lending institutions are for profit industries, not charities. It is unfortunate, but that's life in our political/economic system.
Credit, driving licenses, and other things are privileges. Yes, some have more privileges than others.
So, yeah, if you have sufficient income and credit history, you can own a credit card. If you have a lot of income or assets, you theoretically don't need a credit card. So I guess you are "privileged".
But if you can't qualify for a credit card, I guess you don't enjoy some privileges.
There are privileges everywhere. For example, if you possess an Amateur Radio license, you have certain privileges. A Novice or beginner's license gives you very few privileges. As you learn and demonstrate more advanced knowledge and ability you get more privileges. It's not a bad thing. If you want to drive, or if you want to fly and aircraft or pilot a boat, you need a license. And each demonsrated level of prowess gets you more privileges.
So the concept of privileges isn't a bad thing. It's just that you generally have to work to attain them.


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## Joe from PA (Sep 25, 2022)

I'm retired, and most would say that I'm very well off. However, I choose to drive a 4 year-old Subaru, and I wear a Casio watch. If credit card "rewards" are stopped, I will pay by my bank's debit card, check, cash or Paypal.


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## plane2train (Oct 25, 2022)

All the bootstraps in this forum couldn’t pull up this thread. Just sayin.

Regarding the topic, the bill as explained by TPG really sucks. It’s arguable that airlines would try to recoup their loss of frequent flyer revenue from credit card partnerships by raising ticket prices, a result that nobody wants. Meanwhile, Target and Wal-Mart would rake in the dough from this while raising prices. As someone who is disabled, my points allow me to travel more frequently. Would hate to lose those rewards that enable me to see my loved ones from time to time.


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## jis (Oct 25, 2022)

In fairness to the customer's choice, the bill should also allow the customer to specify which handler they would like their transaction to be handled by. Afterall the customer ought to have a say in what happens to their money. That would make this whole thing even more convoluted admittedly.


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## Michigan Mom (Oct 29, 2022)

It's well intentioned but the banks aren't willing to make even slightly less profit. They will find a way to squeeze consumers to make up the difference (as evidenced in that story).
Visa/Mastercard have a monopoly. 
Trying to solve these issues without antitrust enforcement as the first step, is going to go nowhere good.
Same thing with telecom, healthcare, etc.


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