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With summer holidays around the corner, millions of Americans are getting ready to charge their Credit card rewards with hard earnings: Points, kilometers and cash that have accumulated throughout the year to help cover flights, hotel stays and increase in the costs of the gas pump. I would know it, as I am one of them.
But what if those rewards suddenly disappear during the night?
This is not a hypothetical one. It is the imminent consequence of an increasing political movement, which flies mainly under the national radar, to regulate the operation of credit card transactions through a wave control law wave.
There is a growing political movement to regulate the operation of credit card transactions through a wave control law wave. ( / stock)
You have read this right: State legislators across the country quietly coordinate a back campaign to exchange exchange rates, also known as “sliding rates” Credit card networks Collect retailers every time you use your card. They say they are doing it to help small businesses. But the actual result will be devastating: the collapse of the rewards programs, the highest bank rates and less financial tools for families who already fight with inflation.
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Everything is a reminiscence of the modification of Durbin, part of the 2010 Dodd-Frank Law. This federal law involved rates in debit card transactions. What did you follow? Banks reduced debit rewards programs, account maintenance costs and deleted free check for millions of North -Americans. Richmond’s studies and the Atlanta Federal Reserve found that almost all retailers saved. Ninety-eight percent did not pass them on to consumers. Sound family?
Politicians of more than a dozen states and Washington, DC, want to do the same on your credit cards. Bills have already advanced to Arizona, New Mexico, New York and Coloradowith more road. These measures would limit the way banks and card issuers apply commissions, especially in portions of a transaction that includes the sales or tips tax, it effectively generates the income that funds the credit card rewards. The Fed New York reported that 86% of the revenue of exchange rates directly finances these programs. Cut this funding and disappear.
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And do not think they will only be points and miles of risk. There are other implications and consequences. Banks and credit cooperatives, especially smaller and regional, will be forced to compensate for lost income. This means that higher monthly account rates, reduced access to credit and harsh loans standards for working families and small business owners.
This is not just a bad economy. It is a bad government. These state laws represent a shadow regulatory regime that imposes broad priced controls on a national financial system that the federal government already regulates. Raises serious constitutional questions:
Do these laws violate the trade clause? Does this constitute the regulation of interstate trade? Are the sliding fee price controls illegal interstate compact that require the approval of Congress?
These laws will force banks and credit cooperatives, especially the smallest and most regional, to compensate for lost income. ( / stock)
We already see the Chaos plays in Illinois. The legislators passed the Law on the Prohibition of Exchange Rates (IFPA) in 2023, and now the State is linked to a federal demand. A judge has already issued a preliminary order that exempts banks outside the state, while Illinois banks and credit cooperatives are stuck under a conflicting rule book.
The plaintiffs, including the American Bankers Association and the Credit Cooperatives of America, are warning that the entire payment ecosystem, from traders to processors, could break down under the pressure of this legal mess. Sound politics? Barely.
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Colorado is in line with his own version of this failed idea: HB25-1282, the so-called “mistake of the rates and the guarantees of the consumer ACT”. Don’t let the name deceive you. This bill is anything that is not fair, and will not protect anything. It is a regulatory nightmare disguised as a consumer protection and it is likely that the taxpayers will finally finally fund.
Colorado politicians are weighing the “law of expenses and consumer guarantees”. (Lindsey Nicholson/UCG/Universal Image Group using Getty Images)
So why are those laws moving so quickly? Simple: It is political theater. Politicians want to say they are “warming up” Credit card companies. In the end, it is the consumer who is punished. The rewards fade. Expenses increase. Access to credit reductions. And working families lose tools that they trust to stretch their budgets.
If the Congress does not intervene, this pile of state laws could reveal the financial infrastructure that supports $ 9 trillion in annual purchases of credit cards. A trip to the grocery store, filling the tank, buying school supplies … Each swipe will cost more and give less.
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It’s time to ring the alarm. It is not just miles and points; It is about Economic freedom and financial choice. North -Americans deserve better than a furtive price control campaign imposed by 50 state capitals.
We have already seen this movie. Let’s not see it again.
