Credit Card Competition Act threatens rewards programs. The proposed legislation, backed by Senators Marshall and Durbin with presidential support, aims to reduce swipe fees and increase market competition. However, analysts warn of significant unintended consequences for consumers. Lower swipe fees mean banks collect less revenue per transaction, forcing them to cut the rewards and perks that currently incentivize card use. Thirty-one million Americans hold airline travel reward cards, with over half of frequent flyer miles generated through credit card spending. Reduced rewards could eliminate a primary savings tool for travelers. Banks may also respond by tightening credit access for higher-risk customers and raising late fees and interest rates to offset lost revenue. Security concerns emerge as lower fees could push processing through riskier third-party channels.
