Your Credit Card Rewards Might Be About to Disappear—Here's Why

You’ve probably gotten used to earning rewards every time you swipe your credit card. Cashback, travel points, gift cards—it all feels like free money, right? Well, a new bill making its way through Congress could change that game forever. And if you think this is just another boring policy debate, think again: it could directly impact how much value you get from your wallet.

The Real Reason Merchants Want This Change

Here’s the thing most cardholders don’t realize: every single time you use a credit card, the store paying for it. When you make a purchase, retailers get charged roughly 1-3% of the transaction amount just to process your payment securely. This fee—called an “interchange” or “swipe fee”—goes to Visa, Mastercard, your bank, and other players in the payment system.

For years, small business owners and major retailers have complained about these fees eating into their profit margins. They say it’s unfair that two companies—Visa and Mastercard, which control over 80% of the market—essentially set the rules. So now, they’re pushing Congress to level the playing field.

The Credit Card Competition Act of 2022 would force larger banks to offer merchants a choice of payment networks when processing transactions. Instead of being locked into Visa or Mastercard, stores could route payments through competing networks. The theory? More choice means lower fees, and those savings get passed along to customers as lower prices.

Sounds good in theory. But history tells a very different story.

The Debit Card Precedent: Savings Didn’t Reach Your Wallet

This isn’t Congress’s first rodeo with interchange fees. Back in 2010, Senator Dick Durbin (the same guy pushing the credit card bill) championed the Durbin amendment to reduce swipe fees on debit card transactions. The promise was identical: merchants save money on fees, so you save money at checkout.

What actually happened? Not much. Studies conducted over the past decade show that the Durbin amendment had minimal effect on retail prices. In fact, a 2015 Federal Reserve analysis found that over 21% of merchants increased their prices after the rule took effect—completely defeating the purpose.

But banks didn’t just accept the income loss quietly. They made it back by hiking fees on checking accounts. Banks subject to the Durbin amendment became 35% less likely to offer free checking, while monthly fees jumped an average of 17-20%. Minimum balance requirements to avoid fees also jumped by at least 50%.

And here’s the kicker: debit card rewards programs essentially vanished. The reduced interchange fees meant less money to fund those perks, so banks just got rid of them.

What Happened to Rewards in Other Countries

Want to see the future of U.S. credit card rewards? Look overseas.

In the U.K., interchange fees have been capped at much lower levels for years. The result? Credit card rewards are anemic. Most U.K. cards offer between 0.5-1% cashback—and anything higher comes with annual fees attached. Australia went through similar cuts a decade ago, and the Reserve Bank reported the same outcome: “Reward points and other benefits have become less generous while annual fees to cardholders have increased.”

If the Credit Card Competition Act passes, expect to see American credit card rewards gradually shift toward the British or Australian model—meaning fewer perks, smaller percentages, and higher annual costs just to access the cards worth having.

The Uncertain Road Ahead

As of now, the Credit Card Competition Act hasn’t gained enough momentum to pass. Industry groups—including the American Bankers Association and various payment processors—have lined up against it, warning that the bill would eliminate the rewards programs that families across all income levels rely on to stretch their budgets.

But the fight isn’t over. If Washington does eventually pass this measure, here’s what you should know:

Credit card rewards won’t disappear overnight. Even countries with heavily regulated interchange fees still have rewards—they’re just less generous. Some issuers may continue offering benefits as a customer retention strategy.

You’ll need to be more strategic about payment methods. If your rewards card now earns 1% cashback but a store charges a 2% processing fee to use credit cards, you might be better off using debit or cash.

Your current credit cards might not be the best fit anymore. Don’t assume you’re stuck with what you have. Explore product changes to better cards, or shop around for issuers still offering competitive rewards.

The bottom line: Whether or not Congress passes this bill, the golden age of premium credit card rewards is under threat. The time to maximize your rewards is now—because the terms of the game could shift faster than you expect.