Earlier today, the Senate voted to limit the fees charged by credit card networks to merchants. While this is excellent news for merchants, it is likely bad news for credit card users, especially those who are enrolled in credit card rewards programs.
Essentially, credit card rewards programs return a portion of merchant fees to card holders. These can be in from of free miles, credit card points, or cash back.
During the Great Recession, credit card companies cut back on rewards programs dramatically. Should the Senate amendment pass, it is likely lead credit card companies to cut back, if not eliminate many rewards programs. It could also lead to increased annual fees on rewards credit cards.
If you currently have a rewards credit card, you may want to pay close attention to any mail you receive from your credit card company: you may get notice that your rewards are being reduced or eliminated.
Ultimately, the rewards credit cards that are least likely to be impacted by this legislation are the ones that offer 1% cashback, airline, or points rewards. More generous programs that offer 2% or higher rewards will likely be altered.
Lastly, if you have a points rewards credit card, you may want to consider cashing in your points sooner rather than later. Credit card companies can reduce the value of points whenever they want, so you may find that the points you have earned will have less value in the future.