Sen. Roger Marshall, M.D. (R-KS) is threatening to pause Senate actions to pass the disastrous Credit Card Competition Act (CCCA). If passed, consumers will see their credit card rewards dry up in the same way that occurred after the earlier Durbin Amendment was passed. With Sen. Dick Durbin (D-IL) promoting this bill as the credit card version of his errant amendment, policymakers need only look at past results to know the folly of the CCCA.
The Durbin Amendment, which lowered interchange fees on debit card payments, just as the CCCA purports to do for credit cards, failed to pass down any benefits to consumers. Fee decreases did not translate into lower prices for consumers, and banks that lost revenue simply made it up by cutting debit rewards. While large merchant retailers may have seen gains, the bill’s goal of helping consumers was a patent failure.
The loss of debit card rewards affects nearly 80 percent of households with incomes of less than $50,000. Without savings on lower fees being passed on to consumers, this loss in rewards results in a net negative effect from the Durbin Amendment.
If policymakers have the best interest of their constituency in mind, they will not repeat the mistakes of the past in a misguided attempt to bring down interchange fees. Consumers deserve better from their government.