WASHINGTON — America’s Credit Unions has been joined by all state credit union leagues and associations in calling on members of Congress to reject the Credit Card Competition Act, arguing the proposal would harm consumers, weaken data security and reduce access to affordable credit.
The Credit Card Competition Act has been resurrected in Congress after President Trump said in a social media post that he wanted all credit card issuers to implement a 10% APR cap by Jan. 20 (see related stories), and later posted his support for the CCCA, which is again being championed by Sen. Roger Marshall (R-KS).
“Credit unions are the original consumer protectors. They strive to serve their consumer members and improve their financial well-being with affordability at the forefront,” the credit union letter states. “Unfortunately, studies show that mandates, like those in the Credit Card Competition Act, don’t lead to lower prices at checkout, and previous asset-size carve-outs show that this will affect credit unions and their consumer members at every size.
“At a time when policies and solutions are needed to bolster our nation’s financial resiliency and increase affordability, studies show that these mandates would slow the U.S. economy, costing $227 billion in lost economic activity and approximately 156,000 lost jobs,” the letter adds.
What CCCA Would Do
In a letter sent to Congress, the credit union organizations argue that if enacted, the Credit Card Competition Act would:
• “Extend failed debit card routing mandates to credit cards, effectively imposing backdoor price controls that primarily benefit large retailers while shifting costs onto consumers and community financial institutions. Past experience with the Durbin Amendment shows that such mandates do not lower prices at checkout, but instead lead to higher fraud, reduced rewards and fewer low-cost banking options.”
• “Increase fraud risks by allowing merchants to route transactions over less secure networks, while also undermining the interchange revenue that helps fund card security and fraud prevention.”
• Reduce access to credit. Interchange helps credit unions provide access to credit and low-cost banking products, especially in underserved, rural and low-income communities. Credit cards essentially provide consumers with a loan at the point of sale to make a purchase they may not otherwise be able to make. Without interchange, many institutions could be forced to tighten credit standards or stop issuing credit cards altogether.
To read the full letter, click here or here.
