Credit Card Competition Act

[pbm]

While watching the NFL on Sunday I saw ads against this legislation.
What are your thoughts on it? I agree it will raise costs for consumers.

Is Congress Going to Kill Credit Card Rewards? - NerdWallet

Supporters of the Credit Card Competition Act of 2022 say it may lower store prices. Opponents argue it may decimate the perks that come with your plastic.

www.nerdwallet.com

 

[atikovi]

The slight drop in fees from like 3% to 2% will be invisible to customers, as no merchant will drop their prices because of it.

When you use a credit card to make a purchase, the retailer is charged somewhere around 1% to 3% of the transaction amount in order to accept your payment and have it processed securely.

I'm still not sure how my credit card can give me 2% back when on average, that's what they charge to the merchants. From what I understand, they make it up in interest fees as few card holders pay off their bill in full each month.

 

[dadto2]

It is true that credit card rewards create a cost to merchants, and that cost us ultimately passed on to the consumer. Savvy consumers are able to manage rewards to benefit themselves. Those who are less financially savvy, or who do not have financial means, pay the price. So I would miss my rewards, but I can also support leveling the playing field.

 

[RhondaHonda]

I sure hope the rewards don’t go away and agree that any savings isn’t going to get passed on to consumers.

 

[joekingcorvette]

Late fees and NSF check fees maintain credit card companies success. Also some companies such as Costco (Visa card) pay you at the end of your 12 month time period. The companies make probably 5% or more interest on your money that is their account. In other words if you have $1000.00 in rewards they are using that money to make at least 5%APR which goes to their account and not yours. Some companies charge fees for taking a debit card payment over the phone. It's usually around a $3.00 charge. Good collectors waive late fees sometimes and offer plans to delinquent cardholders. It's a very profitable business and they cant lose.

 

[pbm]

Many of the restaurants I've been to in the past couple of years are adding a CC fee (2 to 4%) over paying cash.
I also don't understand why this is the governments business.....The TV ad alluded to 'big donors' swaying Congress and I'd think they are correct. I'll probably drop my Costco membership if there are no rewards. The rewards paid for the $120 annual membership fee.

 

[MSCH]

I've never purchased anything and used credit simply I scored some points or got a free mile on a plane.
I put stuff on a CC and I pay it off .
the rewards stuff do not matter to me.

the interest rate doesn't matter either because I dont pay any.

 

[zzyzzx]

I also agree it will raise costs for consumers in some way, with some companies using this new law as an excuse.

 

[Vil_Riker]

While watching the NFL on Sunday I saw ads against this legislation.
What are your thoughts on it? I agree it will raise costs for consumers.

Is Congress Going to Kill Credit Card Rewards? - NerdWallet

Supporters of the Credit Card Competition Act of 2022 say it may lower store prices. Opponents argue it may decimate the perks that come with your plastic.

www.nerdwallet.com

if you saw ads against this then it must be a good piece of legislation.

 

[atikovi]

I've never purchased anything and used credit simply I scored some points or got a free mile on a plane.
I put stuff on a CC and I pay it off .
the rewards stuff do not matter to me.

I see a $50 credit on my account every two or three weeks, so it's not insignificant. I'd miss it for sure.

 

[dnewton3]

The thing I find odd is that way back in the day (decades ago), merchants would often charge an extra fee to offset the use of the CC, because they had to pay that fee to the creditor. Back then, cash was king, and so CCs were considered a luxury that the user should bear the expense of the transaction. The product or service pricing was based on a cash price, and the CC cost burden was pushed in a separate fee to the user.

Fast forward to present day, and CCs are the preferred payment by most retailers; cash is a distant memory. And so, it would be easily argued that the cost of CC payments should be built into the cost of the product/service (and it pretty much is). The VAST majority of business transactions are based on CC/Debit cards, and so the burden of transaction is pretty much built into the face price visible to the consumer. So a cash buyer is actually paying a CC processing fee; unseen.

Yet now, we're seeing that companies want to charge for use of the CC, but then give a discount for debit card use. My question is this ... who's paying for those transactions? If you use a VISA or MC debit card, it still goes through the same processing system, does it not? I realize that there's no "credit" extended, as it's a debit transaction. But it's still a "transaction" that has to have equipment (card readers at the point of sale), payment processing systems that interact with your bank, and personnel to manage those systems. I SERIOUSLY doubt the debit transaction has zero costs involved. So why do retailers give discounts to debit users and not charge them some fee?

One thing is for sure ... the consumer won't see a penny of pricing reduction, and likely will get screwed over on his rewards also.

I find it all maddening and irritating.

 

[Shel_B]

Many of the restaurants I've been to in the past couple of years are adding a CC fee (2 to 4%) over paying cash.
I also don't understand why this is the governments business.....The TV ad alluded to 'big donors' swaying Congress and I'd think they are correct. I'll probably drop my Costco membership if there are no rewards. The rewards paid for the $120 annual membership fee.

$120.00! Do you have some sort of special membership? Mine costs $60.00.

 

[alarmguy]

If this is passed, once again, the corporations will benefit and the public will lose. I wonder how many Americans understand legislation is written by lobby groups in concert with Congress. They dont represent you but convince you that its all in the name of fairness.
Your prices at the store are not going to go lower. The profits of companies will get larger.

 

[Vil_Riker]

The thing I find odd is that way back in the day (decades ago), merchants would often charge an extra fee to offset the use of the CC, because they had to pay that fee to the creditor. Back then, cash was king, and so CCs were considered a luxury that the user should bear the expense of the transaction.

Fast forward to present day, and CCs are the preferred payment by most retailers; cash is a distant memory. And so, it would be easily argued that the cost of CC payments should be built into the cost of the product/service (and it pretty much is).

Now, we're seeing that companies want to charge for use of the CC, but then give a discount for debit card use. My question is this ... who's paying for those transactions? If you use a VISA or MC debit card, it still goes through the same processing system, does it not? I realize that there's no "credit" extended, as it's a debit transaction. But it's still a "transaction" that has to have equipment (card readers at the point of sale), payment processing systems that interact with your bank, and personnel to manage those systems.


I find it all maddening and irritating.

There is normally a $0.30 plus 2.5% of the transaction amount which varies based on the size of the merchant - for the purchase (and sometimes and for the returns as well). Its costly but because people like using credit cards, it is just a matter of fact. Otherwise you lose sales.

It's also more trackable. For cash, you need strict controls as it is easy for it to disappear. With credit cards, the data is already there and reconciled. So you can cut some labor.

 

[fsdork]

$120.00! Do you have some sort of special membership? Mine costs $60.00.

What is an Executive Membership?

Welcome to the Costco Customer Service page. Explore our many helpful self-service options and learn more about popular topics.

customerservice.costco.com

In essence, you pay a higher membership fee in exchange for a 2% reward on purchases (plus some other benefits I've never taken advantage of). The break-even point is at $3000 spent per year. For us, the math works.

 

[alarmguy]

What is an Executive Membership?

Welcome to the Costco Customer Service page. Explore our many helpful self-service options and learn more about popular topics.

customerservice.costco.com

In essence, you pay a higher membership fee in exchange for a 2% reward on purchases (plus some other benefits I've never taken advantage of). The break-even point is at $3000 spent per year. For us, the math works.

Yes, we just did the Executive membership for the first time, it should work for us but if not after one year they will pay us the difference and can go back to the low cost membership card. So nothing to lose

 

[Nick1994]

I hope not. I’ve made $1,610 in cash back so far this year, plus 31k miles of American Airlines points. Also not counting Costco member cash back.

 

[AutoMechanic]

I haven’t mentioned my credit cards on this site yet lol. I have two both give me cash back rewards as well as discounts on certain websites like the MLB Shop and Amazon and Target and other places. I don’t shop at either of those places except the MLB Shop so it’s definitely worth it for that one as I buy tons of merchandise from them. I’ve been making regular payments and my credit is slowly building. If they take the rewards away then I will be less motivated to use it which won’t be good for my credit. I’ve had both for this month only this is my first month with cards. Working on getting an Apple Card next. Not sure if that one will come with any rewards or anything but hopefully it does. The cash back rewards I usually just use towards what I owe. So far not late on any payments and I’m in good standing with both companies so I need to keep it that way. I pay on them 2-3 times a week.

 

[atikovi]

I pay on them 2-3 times a week.

Huh? Isn't the bill due just once a month?

 

[Zee09]

I haven’t mentioned my credit cards on this site yet lol. I have two both give me cash back rewards as well as discounts on certain websites like the MLB Shop and Amazon and Target and other places. I don’t shop at either of those places except the MLB Shop so it’s definitely worth it for that one as I buy tons of merchandise from them. I’ve been making regular payments and my credit is slowly building. If they take the rewards away then I will be less motivated to use it which won’t be good for my credit. I’ve had both for this month only this is my first month with cards. Working on getting an Apple Card next. Not sure if that one will come with any rewards or anything but hopefully it does. The cash back rewards I usually just use towards what I owe. So far not late on any payments and I’m in good standing with both companies so I need to keep it that way. I pay on them 2-3 times a week.

Oh no... the next thing you will get is an iPhone 15 or something dumb like that..