Apparently more people thinking about these things right now.

Saw this in the morning (it's like the algos are spying on me!)

I almost never say this... but Tom Woods is straight-up, downright, 100% WRONG here

Wall Street is sending the public a dire warning: President Donald Trump has become a threat to the very foundation of American freedom — your frequent flier miles. Okay, America’s big banks haven’t been using rhetoric quite that grandiose. But they are accusing Trump of imperiling Americans’ credit card rewards.

Yes, America shouldn't have credit card rewards. They're a dumb, intransparent, rent-seeking, unfair redistribution mechanism #1598123, #1598593. Yes, I know it's a lefty talking point... but you can hate the loyalty schemes scams without a bleeding-heart consideration for the poor.

This affordability gain does come at a cost; American cardholders do tend to reap higher rewards than Australian or European ones. But this is not a good trade from the standpoint of economic justice; few think it is fair to take money from the poor to give to the rich.

not weighing into the political drama of this, or whether or not this specific government legislation (which I know nothing about) is a good/useful way to improve the world...

..."working tirelessly to pass the Credit Card Competition Act, in order to stop the out of control Swipe Fee ripoff!”

At least the president is right about the "out of control [sic!] Swipe Fee [sic!] ripoff"

Large retailers are lobbying hard to get the Credit Card Competition Act passed during December’s lame-duck congressional session. Banks have responded by issuing a “code red,” in the words of the Wall Street Journal. In recent days, their lobbyists have warned policymakers that, if swipe fees fall, credit cardholders’ cash rewards and travel points will go down with them.

Yeah, that two major industries are at clear, incentive-based cross-purposes here should tell you something about the insane situation in the first place... what the banking/loyalty/points scheme gains, the retailers lose. Your rewards come out of businesses' interchange fees in the first place (and secondly, if you play the game well, at the expense of unsophisticated/naive customers elsewhere, like we discussed yesterday #1598123)

"if the banks’ big-picture story is right — and the law cuts both swipe fees and credit card rewards — that would probably benefit the average American."

Precisely.

"we need to first examine how the credit card system currently works — and whom it does and doesn’t benefit."

Alright, cool; that's what we came for:

Whenever you use a credit card to purchase a banana from Aldi, or volleyball from Dick’s, or an adult-sized Grape Fanta Can Halloween costume from Party City, the retailer must pay a fee to the bank that issued your card. The bank then uses that revenue to fund your rewards.

Critically, merchants don’t just eat the costs of swipe fees. Rather, they pass on part of the expense to consumers, in the form of higher prices. Some businesses concentrate these price hikes on card users (for example, barbershops often charge less if you pay with cash). But most retailers charge every customer the same price, regardless of their payment method.

Yup, we know.

shoppers who pay with cash or debit effectively subsidize those who pay with cards: The former face higher prices than they would in a world without credit cards, yet they receive no “cash back” or travel points in recompense.

I repeat the graph from yesterday: (authors used FICO scores to proxy well-off, but you can just think of what the graph reflects in reality as outsider-insider or the x-axis showing how well you play the loyalty scam game.) YES, if you play well, you can eke out some benefits... but most people, most of the time lose out.

This arrangement seems unfair on its face. But it is especially troubling when one considers class disparities in the use of credit cards and receipt of rewards.

As a general rule, the higher a person’s income, the more they use credit cards. In 2024, US households who earned less than $25,000 a year put just 17 percent of their payments on credit cards; among households earning more than $150,000, that figure was 51 percent, according to Federal Reserve data.

...and higher income basically proxy ~higher FICOs so yeah: What you're saying is those better off play this game more; yes, exactly.

It's not (like the author focuses on and what turns our friend Tom Woods off) primarily wrong that the poor are getting screwed. They are, but we (mostly) don't care about that (fuck the boomers, who are rich; but also, fuck the poor.)

It's because loyalty programs are intransparent, unnecessary, centralizing, and faces the rich with incentives to play useless, low-paid games -- or face high enough opportunity cost that optimizing become prohibitively expensive; thus constituting a wealth transfer to the financial industry (and the portion of major companies, GE or airlines/hotels or Starbucks, that have turned into proto-banks #743123).

oh, sweet:

According to a 2026 working paper from the National Bureau of Economic Research, the credit card system takes, on average, $88 a year from households with annual incomes below $150,000, while delivering an average yearly benefit of $390 to households with incomes above that threshold.

Credit cards...

serve a variety of valuable economic purposes, from helping households weather unexpected expenses and irregular incomes to facilitating online commerce. And maintaining a credit card system costs money: Banks need to finance the loans they extend, while payment networks must maintain vast computer systems to process transactions and detect fraud.

Yeah, I mean, they don't: we have a better monetary system that doesn't require that (but admittedly, requires other expenses #1598748)

"Yet America’s credit card system is needlessly expensive. Our nation’s merchants — and thus, consumers — pay far higher swipe fees than their counterparts in other rich countries."

THIS comparison I'm less sold on: $100 spent in...

• America (standard visa vs premium): cost merchant 1.23-2.07
• Canada: $0.95
• EU and Australia: capped at $0.30 (though, usually with high/higher fixed fees or machine rents or annual sign-up fees)

OK, now we're back to the usual government-botching-things and stop regulating stupid shit:

Under the CCCA, however, Party City would be able to accept Visa on a transaction — without necessarily using Visa to process the payment. Instead, the bank that issued the customer’s Visa would need to provide Party City with at least one alternative payment processor — a different network that has no relationship with Visa and which might offer lower fees. The law’s authors hope — and the banking industry fears — that this mandatory competition will force down swipe fees. But it’s not clear how much of a difference the CCCA would actually make.

JUST red tape in a separate form. Fuck it.

TL;DR, the article and its author is completely right but for accidental/entirely wrong reasons. It's not the welfare of the poor (or redistribution) that's wrong, it's a secondary (tertiary?) monetary system, with intransparent non-par prices, nudging everyone to play a heavily skewed, mostly negative-sum game.

JUST. DON'T.