Protecting Consumers’ Access To The World’s Safest & Most Reliable Credit Card Network

Washington has launched a misguided political campaign to change how your credit card works, raising costs for consumers and taking away your rewards.

HARMFUL PROPOSAL #1

New Credit Card Late Fee Rule Driven By Politics, Not Reality

The White House and CFPB have proposed a new rule that would limit credit card late fees to $8, part of a misguided campaign conflating hidden fees in other industries with clearly disclosed credit card fees. Here are the facts:

Transparent

America’s leading banks engage in rigorous underwriting practices and are required by law to have clear and conspicuous disclosure of material terms and conditions, aimed at empowering consumers to make informed financial decisions.

Competitive

Banks are incentivized to constantly review and modernize products and services – and potential fees that come along with them – to meet evolving demand and attract new customers, fostering greater transparency and choice for consumers.

Valued

Millions of American households and small businesses rely on credit cards to make ends meet, pay for emergency expenses, and cover the cost of everyday purchases. Consumers also value the rewards they earn when using their credit cards and the certainty of knowing their transactions are safe and secure.

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What will happen if the late fee proposal goes into effect?

Consumer costs go up.

Banks may be forced to increase rates and offer fewer credit options to mitigate the risk associated with more missed payments. All cardholders, including the 74% who pay on time, could see lower credit lines, tighter standards for new accounts, and increased annual percentage rates (APRs). The CFPB admits in its proposal that some consumers “may pay higher maintenance fees or interest…”

Your credit may be harmed.

Reducing late fees would remove an important motivation for consumers to make on-time credit card payments. Notably, missing payments can negatively impact a consumer’s credit score by as much 100 points and could stay on consumer’s credit report for several years, affecting their ability to qualify for a home or auto loan.

Why the proposal is not what it seems

What do Americans think?

A majority of Americans (nearly 60%) believe credit card late fees are legitimate, according to a CBA survey released in April 2023.

Shockingly, the survey also found that most people fail to understand the consequences if they pay late, which could happen much more frequently if the fee is lowered. Nearly half of Americans (48%) mistakenly believe nothing happens if they pay their credit card bills late.

Read the survey results

“Fuzzy Math”

Washington Post Fact Checker Glenn Kessler debunked claims that consumers would save billions. He found that the claim consumers would save money is “fuzzy” and “not exactly kosher.”

Importantly, Kessler also concludes that “a lower fee might harm some cardholders.” This is because the $8 fee doesn’t cover bank costs to offer the credit cards and therefore, if enacted, banks would have to raise costs elsewhere.

Read the Fact Check

HARMFUL PROPOSAL #2

Government Price Controls on Credit Harms Consumers

A small group of populist members of Congress, including Senators Bernie Sanders (D-VT), Jack Reed (D-RI), J.D. Vance (R-OH), and Josh Hawley (R-MO), as well as Rep. Alexandria Ocasio-Cortez , have introduced various legislative proposals that would impose government caps on fees and interest for credit cards and consumer loans. Here’s how they would harm consumers.

Consumers on the margins will be pushed out of the well-regulated banking system.

Empirical data shows that rather than protecting consumers, interest rate caps harm borrowers with high debt burdens by reducing access to credit, which can increase loan defaults and limit access to emergency credit.

Eliminating lenders’ ability to prudently price loans for the risk involved will result in access to credit cards being limited to consumers who have high income and credit scores and pose little risk to card issuers.

According to July 2023 study examining how the imposition of an interest rate cap affects consumers of rate caps in Missouri and Illinois: “binding interest rate caps create loan deserts for some loan amounts — there is demand but no supply.”

There is no evidence that APR caps make consumers better off or save them money.

Credit cards are the primary vehicles for financial inclusion in the United States – and are one of the most highly regulated financial products available.

CFPB research shows that credit cards are, by far, the main way that “credit invisibles” become credit visible in the United States, allowing consumers at the margins to eventually qualify for auto loans, home loans, and other critical lending products.

Read about the flawed proposal

The Power of Choice

While credit cards have become an easy target for politicians armed with empty talking points, America’s leading banks remain fully committed to protecting and expanding access to these valued financial tools.

Because the banking industry is among the most competitive in the world, consumers benefit from the ability to choose from thousands of card issuers, each with unique terms and conditions, to meet their daily needs.

As opposed to many segments of the economy where Americans are charged fees, fee charges and disclosures in banking are heavily regulated at the federal and state levels. In some instances, these oversight requirements have been in place for more than half a century.

Learn more

HARMFUL PROPOSAL #3

Legislation on Capitol Hill could place further controls, weaken your card security, and reduce your current benefits on your credit card to line the pockets of big box retailers.

Senators Durbin and Marshall proposed legislation that would establish an unnecessary and unsafe federally-mandated payment network. Hardworking families will pay the price while big box retailers reap rewards.

You will lose the credit card rewards you love.

Not only would this policy rob consumers of their network choice, but it would eliminate funding for credit card rewards programs and cashback options that American families and small businesses rely on.

Fraud protection and cybersecurity will decline.

Networks and issuers wouldn’t have the interchange revenue to invest in the protections and innovations that cardholders deserve. Additionally, the bill has a hollow carve-out for foreign networks like China UnionPay, which won’t stop American consumer’s transaction information from being routed through less secure foreign countries.

You will have reduced access to capital and credit.

If interchange revenue is reduced for financial institutions, millions of consumers would see their credit card costs increase, while some could lose access to credit altogether, as the economics that support the current system are upended.

Read about the flawed proposal