The following content is sponsored by the Electronic Payments Coalition.
With summer right around the corner, many Americans are making their vacation plans, booking travel accommodations, buying concert tickets and more. While this season brings great fun, it also brings increased spending along with it.
To offset the costs of these activities, many consumers will use credit card rewards and loyalty points. Consumers of all incomes and financial backgrounds take advantage of these reward programs, but the most financially vulnerable households rely on them the most.
Despite the importance of rewards programs to everyday Americans, Senators Dick Durbin (D-IL) and Roger Marshall (R-KS) seem determined to undermine them. Their proposed credit card legislation would restrict card issuers’ ability to fund rewards programs and adversely impact cardholders of all incomes.
A new study from the Electronic Payments Coalition found that nearly 70 percent of low-to-moderate-income (LMI) cardholders utilize rewards cards, showing a strong preference for cash-back cards. Cash rewards redemption rates increase in July and August, indicating increased rewards spending on summer vacation expenses and back-to-school purchases.
Although cardholders of all backgrounds use travel rewards, LMI groups redeem more than one-fifth of their rewards through travel, subsidizing the costs of their trips, and prefer cashback rewards to help cover the cost of everyday essentials.
The report also shows the boost in income from rewards redeemed is three to four times larger for LMI cardholders than for upper-income cardholders. For example, the rewards accumulated by LMI families translates to approximately a 17-cent per gallon discount at the gas pump annually, offering genuine savings for working-class households.
Similarly, another study from Airlines for America has shown that nearly 30 million Americans depend on airline-affiliated credit cards to afford travel. These cards help Americans earn points or miles, which accumulate over time and allow the cardholder to receive perks like class upgrades, access to airport lounges, extra baggage allowance, priority booking and even free flights. Without these programs, many Americans would be unable to afford travel.
A4A estimates that airline credit cards paid for fifteen million domestic visitor trips, adding up to $23 billion of economic activity in the U.S. for the year 2022 alone. This influx of money supports millions of jobs and drives growth in key sectors like travel and tourism. Without airline rewards programs, thousands of Americans would lose their jobs, and cities and states that thrive on tourism would suffer drastically.
Despite these benefits, Senators Durbin and Marshall still want to pass a policy that will snatch these reward programs from the hands of the many hard-working families who rely on them.
Credit card rewards are a lifeline for working class Americans. Senators Durbin and Marshall should prioritize the needs of the people they were elected to serve instead of helping line the pockets of corporate megastores who stand to benefit the most from this legislation.
It’s time for our leaders to stand up for the rights of the hard-working citizens they represent. Let’s put an end to the Durbin-Marshall credit card bill once and for all and ensure that all Americans have access to the rewards and benefits they need to survive.