Congress looking at legislation that could change how you get credit card rewards

The goal of the proposed Credit Card Competition Act is to reduce credit card fees, but some experts say those fees help fund the rewards programs.
Credit Cards
Posted at 10:35 AM, Sep 22, 2023
and last updated 2023-09-22 11:35:51-04

MILWAUKEE — A bill making its way through Congress could change the way you get credit card rewards going forward, leaving the world of racking up points in limbo.

We all know traveling can be expensive.

From booking hotel rooms to buying plane tickets, credit card rewards programs are often the only way many people can take advantage of the benefits.

Rod Clouser knows that all too well.

“It's kind of a perk for us. As we travel and use our cards and all that and we gain points. It's one of those where now I can use those points whether I fly my family around on different trips,” said Clouser.

“When you do use your credit card, it has benefits for both the consumer and business owner,” said Jason Stverak, Deputy Chief Advocacy Officer for Federal Government Affairs, Credit Union National Association.

The proposed Credit Card Competition Act making its way through Congress right now would make it so large banks use at least one credit card network outside of Visa or MasterCard.

The goal is to reduce credit card fees, which is usually about 2% of the purchase and drive down costs for both consumers and businesses.

But some experts say those 2% transaction fees help fund the rewards programs.

Stverak says this may not help consumers in the long run.

“The majority of them see it in lieu of a payday loan. They're not looking for the points to go to Disney every year. They're looking to ensure that if they have an unexpected expense, car breaks down, refrigerator breaks down, medical expense that they don't have to go to a payday lender to meet that 4 or 5, $600 cost,” said Stverak.

The first time this bill was introduced last year, it didn't go through.

While there are reports that this legislation is set to be voted on again by the end of the year, Clouser says the idea stings as the holidays get closer.

“Everything costs so much today and when you can get a little bit extra for some points you gather because of your paying bills with a credit card or traveling and using your credit cards, it all helps today. And to take that away now too, it's like, man, what's next?” said Clouser.