With Black Friday quickly approaching, Americans across the country are getting their finances in order to prepare for the season of giving. Many are looking forward to reconnecting with friends and family, taking time off work, donating to local charities or embarking on a much-needed vacation.
However, despite long hours worked and meticulously saving for months, millions of working-class Americans are hit with an all too familiar sensation – doubt. How, during a period defined by years of historic inflation, can one afford gifts for friends, holiday meals for the family, or a brief getaway with your kids?
Luckily, for many Americans, credit cards provide reward programs which offer much-needed respite from feelings of financial distress during the holiday season. By using credit card rewards programs for cashback or travel, consumers can significantly decrease their holiday shopping expenses and support local businesses, while remaining certain their private financial data remains secure.
Among the more than two-thirds of working-class families who own credit cards with an associated rewards program, there is a pronounced spike in points redeemed during the months of November and December. This is a testament to the crucial role these rewards play in annual holiday shopping. In 2023, nearly $23 billion in credit card points were cashed in, while unredeemed rewards neared $38 billion. If, hypothetically, working-class Americans had utilized this untapped cash for their holiday shopping last year, their total bill would have fallen by roughly 30% – proof that credit rewards have tangible benefits across the income spectrum, rather than being concentrated only among the highest earners.
Unfortunately, a misguided bill in Congress championed by Senators Dick Durbin (D-IL) and Roger Marshall (R-KS) will jeopardize the ability of card-issuing banks to offer credit card rewards, costing everyday Americans and small businesses billions. That means less cashback rewards for groceries and gifts or less travel rewards to help make the flight to visit grandma more affordable.
Further, despite loud claims to the contrary, the bill will do nothing to reduce prices for consumers – something that has been historically evident with the passing of similar legislation on debit cards in 2010. At the time, Congress capped interchange revenue on debit cards, and large retailers promised to pass savings along to consumers. In reality, those promises were not kept. A Government Accountability Office (GAO) report found that the price controls led to the loss of debit rewards programs and free checking accounts, which millions of lower-income Americans and their families relied on.
Without credit card rewards programs, hard-workers and meticulous savers across the country will find themselves in financial peril, unable to rely on points that once enabled them to buy gifts for family and friends.
And as if this isn’t bad enough, the bill will also expose these same customers to an increased risk of credit card fraud and personal data leaks.
Currently, nearly all of your credit card purchases are handled by state-of-the-art payment networks, backed by financial institutions that invest billions to protect your data. However, Durbin-Marshall will quickly change this, allowing inferior networks to infiltrate the marketplace. Corporate megastores, who are now only allowed to utilize the safest and most reliable credit card networks available, would quickly flock to cheaper and less secure networks in order to improve their bottom line – inflating their profits at the expense of your private data.
Take for example giant corporations such as Wawa and Target – they have a history of lax data protection and low investment in customer security. Transferring routing decisions away from the expertise of the financial sector and into the hands of these megastores will only exacerbate data breaches, and put your most sensitive information at risk.
The Durbin-Marshall bill has small business in its crosshairs as well. Estimates show that while big businesses, such as Kroger and Walmart, will accrue $2.9 billion in benefits upon implementation of this legislation, mom-and-pop shops will lose crucial access to credit card reward programs, hindering their business development and only source of income.
Local businesses are the backbone of an American economy that has been powered by the working class for generations. Unfortunately, Senators Durbin and Marshall’s legislation seeks to strip away credit card rewards and personal data privacy from everyday Americans, while simultaneously sabotaging local businesses in the process. In total, the legislation could cost American small businesses a whopping $1 billion in lost credit card rewards. This is not right.
All too often our legislators forget how their actions impact real people. This holiday season, let’s look out for working families and oppose the Durbin-Marshall bill.
Richard Hunt is the Electronic Payments Coalition’s first executive chairman. Hunt is the former president and CEO of the Consumer Bankers Association, which he led for nearly 14 years, building the organization while leading its members through an unprecedented regulatory environment and an extraordinary era of technological change.
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