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| Points and miles news of the week |
| by Brian Kelly |
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Visa and Mastercard interchange fees settlement
This past year, there’s been a lot of discussion over interchange fees, also known as swipe fees, and multiple looming battles between retailers who have to pay interchange fees and the credit card companies who set the rates for every transaction. We consumers sit in the middle.
So, are interchange fees good for us? I think so because merchants build them into their pricing and interchange fees are what funds security on credit networks. That protects us all from fraud. That money has to come from somewhere.
Also, most perks and points are paid for by interchange fees. Simply put, if interchange fees were capped at where they are today, you’d see far less earning potential for consumer programs. When I talk to my European friends, they are astonished that there are multiple credit cards where we can earn 3, 4 or 5 points per dollar.
Let me be very clear: If there was ever legislation from the government — like the Credit Card Competition Act — we could kiss a lot of those points-earning opportunities goodbye.
We know that historically, retailers have not passed savings on to consumers when there is a reduction in interchange fees. We saw this in 2011 with debit cards.
So, if interchange fees were to go down dramatically, we could see a direct correlation with fewer points, rewards and purchase protections. So, in general, I am not a proponent of legislating interchange fees because it would take value that consumers enjoy today and put it in the pockets of retailers.
This week, there was a huge settlement between retailers and credit card companies in a case that has been going on since 2005. I was quoted in The New York Times about it and overall, I don’t think this is a doomsday. It’s not great for consumers because retailers might feel emboldened to add more fees or add a fee if you’re using a premium credit card. I would caution retailers against that because consumers will vote with our wallets, and retailers might not want to save 1% just to end up losing an entire purchase or customer for life.
I’m hopeful that this settlement will take the wind out of the Credit Card Competition Act, especially when Congress has more pressing issues to deal with in our country. If you want to email your representatives and tell them not to ruin our points ecosystem, it just takes a few seconds.
Points and miles spotlight: Q&A with Points by J
I’m starting a new series to highlight the influencers who I follow and admire for the way they’re able to communicate points and deals. One of them is Jess Bohorquez, better known as Points by J, who has an informative and approachable style. I highly recommend following her if you don’t already. I recently got a chance to ask her some questions — let’s go!
Brian: What’s been your best redemption lately?
J: It’s one that’s coming up soon! My husband and I just booked a spa and wellness weekend at Miraval Arizona for three nights. I used 209,000 points (transferred from Chase to World of Hyatt) instead of paying the $13,000-plus cash price.
Brian: That’s a great value for your points since we value Hyatt points at 1.7 cents apiece. You’re saving over $9,000! So besides Hyatt’s great value, are there any other loyalty programs you feel are overlooked?
J: Flying Blue, which is the loyalty program for Air France-KLM. It often has incredible deals to Europe. Flying home from Prague in business class for just 42,000 points was one of my favorite 2023 travel memories.
Brian: What’s the one credit card or travel perk you couldn’t live without?
J: That would have to be my Chase Sapphire Preferred® Card and travel insurance! It was my first travel card and one that I continue to use and love. It offers travel protections and I think many times, people overlook the value of that feature.
Check out Points by J on Instagram and give her a follow so you can see all of her upcoming points and miles adventures!
Have a great weekend,
BK
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| Photo Credit: WYATT SMITH/THE POINTS GUY. |
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