by Carson Carroll
The Credit Card Competition Act is great for big-box retailers like Target, but it’s extremely harmful for consumers.
American families are struggling through a cost of living crisis. Many are not saving for the future, they are struggling to stay above the water. Currently, over 60 percent of Americans are living paycheck to paycheck, up two percentage points from last year. Some families are struggling to afford basic necessities like gas and groceries.
The Credit Card Competition Act (CCCA) seeks to expand on an existing debit-card policy that provided large retailers with a staggering profit increase. Last year, Congress excluded the CCCA from the omnibus bill, but it was reintroduced this year. It would encourage credit card competition at the literal expense of the consumer.
Now is not the time for legislation that will negatively impact the consumer.
The legislation, at surface level, looks like it would cut costs. It looks promising from afar, but zooming in exposes serious cracks.
The CCCA would require banks over a certain size that issue credit cards to ensure that multiple credit card networks can be used instead of just one – mandating that one of the networks is not Visa/Mastercard.
A major drawback of the legislation is that banks would lose money, which would inevitably force them to raise interest rates. Interest rates are already through the roof, so additional burden would be crippling for many credit card holders.
Consequently, they will be forced to raise fees and most likely eliminate free checking options. This makes using a credit card much less accessible for the average American, especially younger users who are just starting out. It is already hard enough for college students and young adults to build credit in order to rent apartments or take out loans for a car. Implementing higher fees will make it nearly impossible for young people to build credit.
Also, a major draw to higher-level credit cards are the rewards. When hit with higher costs, they will have to pull these back. This, along with the increased fees, will de-incentivise holding a credit card for many.
Additionally, consumer security would be much harder to ensure. The revenue that banks would be missing if this legislation goes through is vital to ensuring adequate consumer protection measures.
I implore Senator Marsha Blackburn and Senator Bill Hagerty to vote in favor of the best interests of consumers and against the Credit Card Competition Act. Please, reach out to your legislators and let your voice be heard on this issue.
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Carson Carroll is a Marketing Program Manager from Spring Hill, Tennessee. He graduated from Tennessee Tech University in 2021 with a Masters in Business Administration.
