Trump and Vance push Credit Card Competition Act to cut swipe fees — but your rewards could shrink. Here’s why that could be good for you

And that’s not the only way credit cards can cost you. For years, consumers have complained about high swipe fees. Every time you tap your card to pay for a coffee or type in your number online to make another Amazon order, the retailer is charged a fee, and they generally pass it on to you.

But thanks to pending legislation, that could be about to change. And the president and vice president are both pushing hard for it.

The Credit Card Competition Act

Way back in 2023, Dick Durbin, a Democratic Senator from Illinois, introduced the Credit Card Competition Act.

The legislation takes aim at swipe fees in multiple ways, mainly by trying to increase competition. It would prevent credit card issuers with assets of over $100 billion from restricting the number of networks they can process payments on, and would prohibit restricting payments to networks owned by a card issuer.

The bill has been stalled for the last three years, but was reintroduced at the beginning of this year. That’s when Trump first endorsed it. But he’s been talking about it much more as of late, as has the VP.

Seven times so far this year, in fact, according to NACS, an industry group representing convenience stores and gas stations. Groups representing retailers are incredibly excited about this move. The Merchants Payments Coalition, another retail group, also released a statement praising the act this week, pointing out that it would save consumers money as credit and debit card swipe fees have risen 80% since the pandemic.

What this means for rewards

On the opposite side of this debate are the big banks and payments processors. As Eric Levitz reported at Vox, “Wall Street is sending the public a dire warning: President Donald Trump has become a threat to the very foundation of American freedom — your frequent flier miles.”

The threat of the CCCA has been declared a “code red,” for lobbyists representing big banks, according to the Wall Street Journal, and they have launched a full-scale effort to convince consumers that if swipe fees fall, cash rewards, perks and points will, too, as that’s how those things are funded.

However, as Levitz argues, swipe fees function as a de facto tax on the poor. Merchants don’t eat the cost of the fees. With a few exceptions — sushi restaurants and barbershops often offer a cash discount — retailers raise their prices for everyone because of the fees, not just those paying with credit cards. Poor people are less likely to qualify for credit cards, especially not ones with generous perks. They are more likely to pay with cash or debit, but don’t reap any of the rewards of swipe fees.

Most of us don’t perceive this silent wealth transfer happening every day. And middle and upper-income Americans are hooked on their rewards.

Consumers can’t get enough of points and perks

Rewards have played a part in the growth of credit cards (and debt) by helping credit card providers attract and retain customers.

“The reward point functions as an alternative currency with real economic value, yet it continues to carry aspirational and emotional significance,” So Yeon Chun, an associate professor of technology and operations management at INSEAD, recently told Business Insider.

“In other words,” he said, “rewards have become a dual-purpose behavioral currency: A tool for economic relief and a channel for emotional and symbolic value.”

Redeeming rewards “can have an outsize effect on satisfaction” on cash-strapped consumers, according to Bain & Company.

A few years ago, rewards redemption was a “routine episode, or interaction that fulfills a need, unlikely to faze customers,” according to the global management consulting firm. “But it has since become a ‘moment of truth’ — an episode with a high likelihood to delight or annoy, depending on how well the credit card provider executes the end-to-end process.”