We all hear the television commercials asking “What’s in your wallet?” But what we need to be asking is “who’s in your wallet,” given Washington politicians’ eagerness to regulate nearly every aspect of our financial lives.
As he did a decade ago with debit cards, liberal Sen. Dick Durbin (D-IL) is now pushing to regulate credit cards in a way that will end consumer rewards and cash-back programs.
Durbin is well known for regulating debit cards in 2010 through an amendment to the Dodd-Frank law that bears his name. The Durbin Amendment was purportedly aimed at lowering debit card fee transactions for consumers. What we’ve learned since then is that capping debit card fees resulted in higher costs for consumers.
Banks responded to the loss in exchange fee revenue by raising other rates and fees, eliminating free checking and wiping away nearly all of the benefits and rewards they offered with their branded debit cards. Durbin’s “pro-consumer” legislation wound up costing consumers billions, the loss of perks and benefits and priced millions out of owning a bank account.
Now, along with his friends in the big-box retailer industry, Durbin is back at it with what he cynically calls calls “the Credit Card Competition Act of 2022.” Under the guise of creating “more competition” in credit card exchanges used by merchants, Durbin is primed to rob consumers of credit-card benefits, just as he did with debit cards.
As all the “what’s in your wallet” commercials make clear, the credit card industry is already highly competitive, with banks attracting customers through innovative products and incentives such as cash back, travel miles, gift-card rewards and numerous other benefits. These are not benefits consumers receive through paying by cash, or, thanks to Durbin, a debit card. They are the result of market competition in the credit card industry that puts actual financial benefits into consumers’ pockets.
The Points Guy, a publication focused exclusively on consumer rewards, states that the Durbin Bill “would be disastrous for consumers, especially those who get immense value from rewards and protections on credit cards…”
Durbin’s proposed interference in the credit card market will wallop consumers in three ways: they will lose rewards and cash-back programs; they will face higher annual fees; and they will be exposed to the potential of fraud through less-secure networks. None of this is speculation, as Durbin’s meddling with debit cards demonstrated exactly how banks respond when handcuffed in a competitive market.
South Carolina’s lawmakers should steer far clear of this anti-consumer legislation.
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