Consumers might be paying more than credit card perks are worth, officials say

Credit card holders could be paying more in fees and interest than their travel rewards and other perks are worth, Biden administration officials argue.

Credit card holders could be paying more in fees and interest than their travel rewards and other perks are worth, Biden administration officials are arguing, raising scrutiny on loyalty programs that shape millions of people’s spending.

The Consumer Financial Protection Bureau and the Department of Transportation held a joint hearing in Washington on Thursday that brought together representatives from airlines, financial institutions, unions and consumer advocacy groups to discuss whether new regulations are needed.

Regulators are looking into the promises made around sign-up bonuses, changes to point values, obstacles in redeeming points and loss of rewards when cards are closed. They’re especially focused on travel rewards, like those offered by airline-branded credit cards that let users rack up frequent flyer miles. Forty-one percent of Americans have travel rewards credit cards, according to a NerdWallet survey last year.

“We’re going to look into how we can make sure companies are being straightforward about what people will get from these frequent flyer miles or loyalty programs when they sign up, and whether people are actually getting the deal that they were promised,” Transportation Secretary Pete Buttigieg said at Thursday’s hearing.

The heightened scrutiny on credit card rewards is part of the White House’s broader crackdown on “junk fees” and other pricing practices, particularly in industries like financial services and airlines, that the administration sees as unfairly squeezing consumers and contributing to inflation.

https://www.nbcnews.com/business/consumer/credit-card-rewards-high-fees-rcna151281

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