Lame Duck, Not Dead: How Credit Card Issuers Should Prepare for the 120th Congress

The Credit Card Competition Act may fade away as its original sponsors leave Congress, but pressure on the credit card business model isn’t going away. Lawmakers are likely to keep targeting interchange, card routing, interest rates, and fees. New proposals could also put more pressure on rewards programs, late fees, foreign exchange fees, and other parts of the card business that generate revenue. 

A cap on interest rates could have an even bigger impact. With average rates above 20%, a 10% cap could make it harder for issuers to lend to subprime and weak-prime borrowers, potentially limiting access to credit. Issuers should prepare for different rate caps and network-routing requirements while keeping an eye on state-level action. The bigger challenge will be protecting the three main sources of card revenue: interest, interchange, and fees.

Companies Mentioned: 

American Express, Bank of America, Barclaycard, BMO, Capital One, Chase, Citi, Citizens, Discover, FICO, Fifth Third, First Citizens, Huntington, KeyBank, M&T, Mastercard, Navy Federal Credit Union, PNC, Regions, Santander, Synchrony, TD, Truist, U.S. Bancorp, USAA, Visa, Wells Fargo