As banks have raised credit card swipe fees over the past decade, they have also “dramatically increased annual fees and the money they take from consumers through interest,” according to the Merchants Payments Coalition.
“The card industry is triple-dipping, making millions of consumers pay three times for their credit cards,” MPC Executive Committee member and NACS Senior Vice President of Government Relations Lyle Beckwith said. “The largest banks make consumers pay an annual fee whether they use their card or not, then pay higher prices because of swipe fees every time they make a purchase, then pay huge interest rates on the balance. By charging more in all three areas, banks continue to get rich on the backs of small businesses and American consumers struggling to make ends meet.”
The Consumer Financial Protection Bureau reported last week that “credit cards have never been this expensive” and that the average annual credit card interest rate was a record-high 22.8 percent in 2023, up from 12.9 percent in 2013. Furthermore, the average rate was 14.3 percentage points higher than the prime rate, compared with 9.6 percentage points higher in 2013, giving banks a record profit margin on interest.
Interest charged on credit cards by major banks totaled $105 billion in 2022, and in 2023 that included an extra $25 billion that came from increasing the difference between the prime rate and the amount charged to cardholders, the CFPB said. The higher profit margin cost the average cardholder about $250 a year extra.
The MPC stated that this new data comes as Senate Judiciary Committee Chairman Richard Durbin (D-Ill), a lead sponsor on the Credit Card Competition Act, has scheduled a hearing in April on the lack of competition in swipe fees.
Two new Senators, Jack Reed (D-R.I.) and Josh Hawley (R-MO), have added their names as cosponsors of the bill.
NACS members are encouraged to reach out to their members of Congress and ask that they support the Credit Card Competition Act. NACS makes it easy for retailers and suppliers to send a message to their legislators via the NACS Grassroots Portal.