In today’s video, we look at the Credit Card Competition Act, which was introduced in June by Senator Dick Durbin. The goal of this credit card legislation is to reduce credit card payment fees (or interchange fees) so that merchants can increase their profit margin and pass on some savings to consumers.

There’s a lot of debate back and forth about if the Credit Card Competition Act will actually be good for consumers. Many people don’t believe this will actually pass any savings onto consumers because studies show that a similar bill called the Dodd-Frank act of 2010 really didn’t pass on many savings to consumers who used debit cards.

BankRate has an article recently that talks about the possible issues of this bill if it get’s passed. For one, they’re concerned credit card rewards will be reduced drastically because interchange fees are one of the greatest methods banks use to pay for the rewards. The second is that it would potentially open up the consumer to higher chances of credit card theft since it would create the option for merchants to choose smaller, less secure payment networks than Visa and Mastercard. The third is that with less financial incentive to push credit cards, banks may approve fewer accounts, especially for those who are poor.

Here’s why I actually think it may help consumers if it is passed. Ultimately I don’t think it’ll pass on more savings to consumers. But if it did reduce rewards for credit cards, it might make credit card usage less enticing for consumers. Americans have about $8000 in revolving credit card debt according to Nerd Wallet. What if Americans actually used credit cards less because they don’t feel like they’re being rewarded?

Timestamps:
0:00 - Intro
0:39 - What is the Credit Card Competition Act?
2:46 - Cons of the Credit Card Competition Act
4:55 - How Much Money Credit companies off
5:36 - How I Think We Could Benefit from the Act

#calebbale #credit cards,

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