Credit cards that offer airline miles, cash back and other rewards create expenses that are passed on to everyone—including people who don’t use or fail to qualify for credit cards.
It’s one reason why a new credit card bill in the U.S. Senate is supported by Robert Triest, chair and professor of economics at Northeastern. “The current system is essentially causing prices to be higher than consumers otherwise would have to pay,” Triest says. The bipartisan Credit Card Competition Act seeks to lower consumer prices by weakening the dominant hold of Visa and Mastercard, which control 77% of the U.S. credit card market (alongside industry rivals American Express and Discover). The two giants impose fees that rank among the highest in the world, resulting in more than $77 billion in processing payments by U.S. merchants in 2021.