“It is anti-consumer,” said Brian Kelly, also known as “the Points Guy,” addressing the so-called Credit Card Competition Act—a proposed bill sponsored by Sens. Roger Marshall (R-Kan.) and Dick Durbin (D-Ill.) that would impose network routing requirements on banks that issue credit cards.
Kelly, who turned a one-man credit card reward points blog founded in 2010 into a popular website focused on travel and credit card rewards best practices, has been highly critical of the proposed legislation. He joined American Bankers Association President and CEO Rob Nichols today during the association’s Washington Summit to discuss how consumers would be harmed and how lawmakers may not fully understand the implications of the bill. “No matter how you slice it, this bill will not help consumers,” Kelly said. The new routing mandate would reduce the revenue that banks receive for processing credit card transactions, forcing banks to reduce the popular rewards and benefits that revenue supports.
Many consumers choose credit cards based on the rewards they offer, such as cash back, travel miles or other perks. “Well over half of Americans have some sort of some form of rewards,” Kelly said, explaining that—contrary to the claims of some of the bill’s supporters—points aren’t just for the rich. “Wages have not kept up for many people and they use cash-back and other rewards to get by. They get gift cards for family events or to use for travel. I just don’t understand taking away that value for consumers and then depending on the trickle-down economics of retailers passing on savings to customers—it’s just ridiculous.”
According to a recent ABA survey conducted by Morning Consult, 80% of consumers have at least one credit card that offers rewards, and 88% say they value the rewards program on their credit cards. By a more than 2-to-1 margin, consumers say they would be disappointed to lose the rewards program on their credit cards due to government regulatory changes. “The more we educate people on the [rewards] system and how it’s beneficial to consumers, I think lawmakers will think twice once they realize the real ramifications of this,” Kelly said.
