The Biden administration and zealots in Congress are pushing forward an egregious cash-grab that picks the pockets of working-class families and subsidizes wealthy corporations while opening Americans up to credit card fraud.
Congress's new Credit Card Competition Act is anything but “pro-competition” – instead it takes money directly out of the pockets of working families and subsidizes big-box retailers by meddling in the way transaction fees are processed for credit purchases.
Sen. Dick Durbin – an Illinois Democrat who orchestrated the 2010 “Durbin Amendment” which also meddled unnecessarily in interchange fees and rerouted billions of dollars to mega-retailers – introduced his latest bill that destroys credit card rewards programs working families rely on.
The Credit Card Competition Act would dismantle credit card rewards programs for working Americans and benefit major retailers by allowing them to process credit card transactions in the cheapest way for them. The bill could contribute billions of dollars annually to the profits of these mega-retailers, while eliminating rewards programs for working families and compromising secure transactions.
Since the beginning of our modern financial system Americans have enjoyed generous rewards and cash-back programs through credit cards that other countries don't have access to because we have a rigorous system of free enterprise.
In 2020, credit card companies gave back close to $60 billion dollars in credit card rewards to working-class families to help pay for groceries, back-to-school clothes, and other items, but the "Credit Card Competition Act" would eliminate rewards programs as we know them.
The problem is credit does not exist in a vacuum and when transaction fees are artificially tampered with by Big Government, consumers pay the price because credit card companies simply eliminate rewards, travel points, and other benefits programs to recoup lost revenue.
Propagandists are doing their typical song and dance, claiming the bill benefits low-income Americans, but the reality is the Credit Card Competition Act benefits big-box retail stores by allowing them to process transactions in the cheapest way possible for them – and this cost will be passed on to consumers by the credit card companies.
We already know what happens when Congress meddles in transaction fees or interchange fees and artificially caps them. One need only look back to the 2010's “Durbin Amendment” and legislator's catastrophic failure to reduce costs for consumers by slashing interchange fees on debit purchases.
Back in 2010, big-box retailers claimed they would reduce prices for customers if debit card interchange fees were slashed, but a study of the aftermath found over 75 percent of retailers didn't lower prices and most retailers drove prices up for working families. Retailers have rerouted $145 billion dollars into their own pockets thanks to the 2010 Durbin Amendment since 2011.
The second massive red flag in the Credit Card Competition Act is that if it passes, our financial system – the strongest in the world – could be more vulnerable to credit card fraud. The bill intervenes in how credit card companies do business, forcing them to remove fees they need to make transactions safe, secure, and reliable.
Financial services companies are responsible for cybersecurity efforts to prevent fraud and abuse and will likely cut back on these efforts if Congress meddles in interchange fees.
Third, the bill is likely to add to income inequality and make it more difficult for Americans with limited credit histories such as young people and minority groups to access safe credit. If Congress tampers with interchange fees, the cost of offering credit to new customers will rise. This will leave the most vulnerable Americans without access to safe credit and could force families to take out predatory "payday loans" to make ends meet.
The Credit Card Competition Act is another absurd attempt by Congress and the Biden White House to intervene in our financial system to benefit the uber-wealthy and will end up sticking the middle class with the bill.
This ill-conceived legislation directly strips benefits from working families and risks the security of the American financial system while benefiting a few wealthy corporations. All citizens need to let their Senators know that the Credit Card Competition Act is nothing more than a thinly veiled attempt to pick the pockets of hardworking American families. Citizens need to act – and act fast.
