In Washington, the hardest thing to kill is a bad idea. And one of the worst will soon be back: The so-called Credit Card Competition Act.
How bad is it? Economic analysis from Oxford Economics Research, an independent advisory firm, found that this bill could cost the U.S. economy $228 billion and 156,000 jobs.
The bill is a job killer and would impose a government takeover of the credit card system. Championed by corporate megastores and grocery conglomerates, the proposed anti-growth mandates in the legislation threaten the secure and convenient payment system consumers and small businesses rely on daily.
The result would be an economic decline and loss of jobs.
Fortunately, the bill was blocked in 2022 and 2023 by bipartisan opposition. It’s also opposed by consumer groups, unions, mom-and-pop businesses and the local financial institutions that serve them. The tourism industry also opposes the bill. Why? Because one of the first things to go if this bill passes would be rewards programs.
About seven in 10 Americans have a credit card with rewards, and airline, hotels, car rental, and dining are the most popular categories of spending and redemption. Cashback reward programs are the most popular, but cardholders rely on travel reward programs when booking vacations or trips. In 2022, miles accrued from airline credit cards paid for 15 million domestic visitor trips that supported $23 billion in economic activity.
It’s not only hotel chains or airlines that benefit from consumer travel but also thousands of small businesses, from local restaurants to the sandwich shops and go-kart tracks at the beach. Many Americans rely on tourism to stay employed.
It’s well known in the travel industry that winter can be a dry spell for beach or lake destinations. Can you imagine if winter never ended? The crowds never came back? It would be devastating — for workers and local economies more broadly because the taxes tourists pay at restaurants, hotels, gas stations or amusement parks help fund everything from local schools to highway and hospital improvements.
The last thing Washington wants, on either side of the aisle, is to kick off 2025 with an economic slowdown. Americans remain cautious about spending and rely on reward points to make a family vacation affordable.
Those trips matter: The latest numbers show travel was responsible for about $1.2 trillion in direct spending. That spending led to an overall economic footprint of $2.6 trillion.
The Oxford research shows that, if this bill passes, discretionary spending will likely be down across the board to $80 billion. That is hundreds of dollars down for every household. There would be less money for movie tickets, pizza ordering, clothes, or anything non-essential.
When this bill inevitably pops up, our leaders need to remember the 156,000 jobs these mandates will erase. They need to remember the constituents who rely on credit card rewards. It is hoped that politicians will remember what this bill will cost.
Richard Hunt is the executive chairman of the Electronic Payments Coalition/InsideSources