Military families should be wary of recent attempts by lawmakers to piggyback legislation creating new credit card routing mandates on top of a defense spending bill, according to an op-ed appearing today in American Banker. Stephen Lepper, CEO of the Association of Military Banks of America, and Anthony Hernandez, president of the Defense Credit Union Council, noted that the sponsors of the retailer-backed Credit Card Competition Act unsuccessfully attempted to add their bill to the National Defense Authorization Act after it became clear the legislation would not pass on its own. (They also failed to add the proposal to the omnibus spending package currently under consideration.)
“Americans generally, and military families in particular, should be concerned about this proposal because it’s a wolf in sheep’s clothing,” Lepper and Hernandez said. “Beneath its promise to lower consumer costs by increasing competition among credit card payment networks lies the significant risk that not only will Americans not see a penny of lower prices, but they will instead see higher credit interest rates, lower credit availability, or both.”
“We believe the CCCA will create a domino effect whereby credit card interchange is reduced, leading to bank efforts to reduce credit risk by tightening creditworthiness standards, leading to the exclusion of many Americans (particularly junior service members) whose creditworthiness may lie on the razor’s edge,” they said. “In short, if there’s anything that will likely force our service members back into the arms of payday lenders, this legislation may be it.”
