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Opinion

The Credit Card Competition Act Does Not Help Consumers

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Julia Marvin

The past few years have been exceptionally hard on consumers. Between inflation reaching record highs and the cost of basic necessities like food and energy skyrocketing, and the COVID-19 pandemic wreaking havoc on the vast majority of Americans and small businesses, we need to make sure our elected officials on Capitol Hill are working to help us. 

Consumer well-being has been a focus of Congress and the Biden Administration, with the recently-passed Inflation Reduction Act being just one example of policies coming out of Washing that will give everyday Americans much-needed relief, create new jobs, and more.

However, while we have certainly seen good work being done, not everybody has the best interests of everyday Americans at heart. In fact, over twelve years ago now, big box stores pushed Congress to pass an amendment that added harmful regulations to debit cards. The share of free basic checking accounts with no monthly minimum balance requirements dropped over 40%, average checking account fees increased by $3.10 monthly, and what’s worse is that these impacts were disproportionately felt by low-income consumers whose account balances do not meet monthly minimums required for fees to be waived. While Congress did not intend to hurt average consumers, the implications of this Amendment played out in the majority of Americans losing billions while greedy corporations got windfalls of cash. This impact, as mentioned above, was felt mostly by low-income and marginalized communities as well as small businesses. Now, members of Congress are considering passing the Credit Card Competition Act of 2022 (CCCA), which would put the same regulations on our credit cards. 

The original debit card amendment that passed in 2010, named “The Durbin Amendment”, allegedly aimed to cut down on interchange fees, which are the fees that retailers pay to process electronic payments with a routing mandate. In simpler terms, this meant that banks were mandated to allow additional “unaffiliated” networks to work on their debit cards, many of which are cheaper because they skimp on things like fraud protection and security. The huge influx of these cheaper networks subsequently created a race to the bottom, draining billions out of our electronic payment systems. The end result? Banks of all sizes lost over $90 million from the debit regulations, which they then passed onto consumers by raising fees, increasing minimum balances, and dramatically cutting back on free checking accounts. 

Certain members of Congress are now pushing CCCA to extend these routing mandates to credit cards. A few things to note: there is no evidence that this will help consumers – in fact, the only precursor that we have to look back on is the Durbin Amendment, which clearly hurt average Americans greatly; and the CCCA does not even mention ‘consumers’ at all. After the original debit regulations passed in 2010, a study from professors at Georgetown University and University of Pennsylvania found zero evidence that these savings “trickled down” to consumers via lower prices at stores. Consumers received nothing but hiked debit and checking fees, and this will be the same case for credit cards if the CCCA passes.

CCCA will hurt all consumers but have a disproportionate impact on those already struggling financially. When the debit card regulations went into effect in 2010, banks made banking more expensive and less accessible in order to cut costs, and the same thing will happen with credit cards. To make up for their billion-dollar losses, banks will also look to reduce their own liabilities by raising credit standards, interest rates, and fees, subsequently making credit much harder to obtain for people who are low-income or have low credit scores. Economists last year estimated this could kick up to 15 million people out of our credit system, primarily in financially marginalized communities.

The CCCA will also force consumers to say goodbye to the credit card rewards programs we use to help pay for gas, groceries, and plane tickets. Just a few years ago in Australia, the federal reserve bank imposed similar credit card policies to limit interchange fees. Australian consumers then saw their free credit cards disappear and their rewards programs shrink. If we let this happen in the US, consumers will lose $50 billion a year via lost credit card rewards alone.

Anyone who is pro-consumer should be anti-Credit Card Competition Act. This proposed policy only works to serve the interests of big box stores like Amazon and Walmart while taking money straight from our pockets. Congress cannot let this bill pass.


Born and raised in Colorado, Julia Marvin has served on Thornton City Council since 2019. A CU Boulder graduate, she currently works in communications and has been a grassroots activist and community advocate since her college years. She lives in Thornton, Colorado with her husband.