MW Airline miles and hotel points threatened as Trump takes aim at credit-card rules

Andrew Keshner

Swipe fees 'impact the fountain from which all loyalty dollars flow,' a Bernstein analyst says

There's new turbulence for airline miles and hotel points. It's not just Trump's 10% credit-card cap idea.

President Donald Trump's newest proposed crackdown on the credit-card industry might put jet-setting big spenders in the crosshairs.

The president has been busy talking up new credit-card regulations recently, starting with his announcement late last week of a planned one-year 10% cap on interest rates. While some experts doubt the measure will actually become reality, they thought it would disproportionately curb rewards for lower-income spenders if enacted, while high-flyers would be able to keep cashing in on rewards.

Trump's newer area of interest - support for the Credit Card Competition Act - is getting less attention. But this measure might actually mean big changes for high-spenders. The bill outlines new regulations for credit-card payment processing that could reduce the pool of money that banks and other issuers use to dole out lucrative rewards.

Trump backed the long-stalled bill "in order to stop the out of control Swipe Fee ripoff," he said in a Truth Social post. Days earlier he called for the one-year interest-rate cap, positioning it as something that could help Americans struggling with rising credit-card debt.

In the debit-card market, merchants are required to get at least two options for debit-card routing, and one must be a low-cost alternative to Visa and Mastercard. The Credit Card Competition Act, which has bipartisan support, aims to extend that requirement to credit-card routing.

There's now a duopoly where Visa and Mastercard control most of the market, according to the bill's sponsors, Sen. Roger Marshall, a Republican from Kansas, and Sen. Dick Durbin, a Democrat from Illinois. The pair reintroduced it Tuesday.

Visa (V) and Mastercard $(MA)$ set interchange rates, which are what merchant banks pay to card-issuing banks. The Credit Card Competition Act doesn't directly mandate lower interchange rates across the board, but it outlines a system in which customers would be able to bypass Visa and Mastercard's routing systems for credit-card transactions. Payments running through lower-cost, alternative systems would yield less money for banks and other partners that issue cards and currently lean on swipe fees to help finance rewards programs.

Any legislative tinkering that results in lower interchange rates "could be devastating for rewards," said Ted Rossman, senior industry analyst at Bankrate.

Swipe fees "impact the fountain from which all loyalty dollars flow," according to a Bernstein note Wednesday.

U.S. airline carriers make more than $30 billion each year from the mileage they sell to credit-card partners, analysts said. Carriers would face an "indirect risk" from a proposed rate cap because card companies might have to rethink how many miles they purchase for their rewards programs, the note said.

The repercussions of the Credit Card Competition Act could be "more negative" than those of the proposed fee cap because reduced fee revenue would get at the main source of money for loyalty programs, they said.

Hotel chains including Hilton $(HLT)$, Marriott $(MAR)$ and Hyatt $(H)$ collected an approximate $1.5 billion in fee revenue from their co-branded cards, the analysts said.

If credit cards became a less-profitable revenue source, there would be little immediate impact for hotel chains due to their current deals with card companies. But if credit-card profit margins are noticeably lower, those companies would likely become less generous with hotel chains in the future.

Hilton and Marriott's co-branded card deals with American Express $(AXP)$ offer a bit of insulation from any changes to interchange fees, the note said. And since American Express both lends and operates a payment network, it could be a winner if legislation pushes more swipe transactions its way, the analysts wrote.

On one hand, the rewards programs that card issuers offer are a huge business. Banks paid $47.5 billion in rewards during 2024, according to the Consumer Financial Protection Bureau. Approximately half of the sum, or $23.9 billion, went to points, while airline-miles rewards cards paid $6.6 billion and cash-back cards paid $16.6 billion.

The booming rewards economy stands in contrast with the heavy debt loads being accumulated by some cardholders, underscoring how higher-income earners who pay off their credit-card balances on time can thrive in the current financial system, while lower-income consumers struggle with affordability. Americans held a collective $1.23 trillion in credit-card debt through the third quarter. And credit-card issuers collected $160 billion in interest during 2024, according to the Consumer Financial Protection Bureau.

It remains to be seen what happens next with Trump's call for a temporary cap or the legislative future of legislation like the Credit Card Competition Act.

Rossman and the Bernstein analysts say the Credit Card Competition Act is still a long shot.

Still, the continued focus on credit-card lending costs may force some sort of deal, Rossman said. "I'm not sure the financial industry can continue to parry this away without giving something up," he said.

The National Retail Federation applauded the reintroduction of the Credit Card Competition Act. "By fostering much-needed competition, this bipartisan legislation will provide direct relief to both retailers and consumers, ensuring the industry can continue delivering quality products at affordable prices," it said in a statement.

But a trade group representing payments companies including Visa and Mastercard argued the CCCA wouldn't actually lead merchants to lower prices as a result of lower swipe fees. Further, it would "line the pockets of corporate mega-stores while hurting Main Street small businesses, eliminating the credit-card rewards Americans rely on to make everyday purchases more affordable, weakening the security and data protections consumers expect, and harming local economies by reducing tourism and limiting access to credit," the Electronic Payments Coalition said.

Banking industry trade groups also said Tuesday that credit-card reward programs were at stake with the reintroduced bill.

On a Tuesday earnings call, Delta Air Lines$(DAL)$ CEO Ed Bastian fielded a question about Trump's earlier proposal - the potential 10% cap - and what that would mean for the carrier's loyalty program. The carrier offers SkyMiles cards in partnership with American Express.

The possible rate cap "would restrict the lower-end consumer from having access to any credit," Bastian said. The airline would be in touch with American Express, he said, but there would be a world of questions to address if cap restrictions materialized.

"I don't see any way we could even begin to contemplate how that would be implemented," he said.

"President Trump pledged to deliver relief for the American people from Joe Biden's inflation and affordability crisis, and his administration is exploring every tool possible to do just that," a White House official told MarketWatch.

-Andrew Keshner

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January 15, 2026 08:05 ET (13:05 GMT)

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