Nichols: Credit card rewards benefit all customers

A guest column in the New York Times claiming credit card points are being paid for by the poor is not supported by the evidence, American Bankers Association President and CEO Rob Nichols said in a recent letter to the editor appearing in the newspaper. The opinion piece by guest columnists Chenzi Xu and Jeffrey Reppucci argued that credit card rewards are essentially “a tax on less affluent customers.”

“It is not only the wealthy who benefit from credit card rewards,” Nichols countered. “The vast majority (77%) of lower-income cardholders have a rewards card, and they use rewards for everything from cash back at the grocery store to miles for family vacations.”

Nichols also noted that after Congress capped merchant debit card fees, the Federal Reserve Bank of Richmond found that most retailers did not lower prices, and researchers from Georgetown University and the University of Pennsylvania found that capping the fees likely made consumers worse off by increasing account fees and reducing debit card rewards. “These results should come as no surprise given that the benefits merchants receive from accepting credit cards easily outweigh the costs,” Nichols said.