Trump's CCCA boost is misguided; the bill would harm military families

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The urgency surrounding the Credit Card Competition Act has intensified following President Trump's recent call to lower credit card interest rates and his expressed support for the CCCA. While these proposals are framed as efforts to improve affordability, taken together they would significantly reduce access to safe, regulated credit and weaken consumer protections, especially for the very populations that community-based banks and credit unions are designed to serve.

Interest rate caps and mandated routing requirements both constrain the economics that allow community financial institutions to offer affordable credit, fraud protection, rewards, and specialized programs. When layered simultaneously, they risk pushing millions of consumers, particularly lower-income households, young adults, small-business owners, and military families, out of the regulated financial system altogether. History shows that when responsible lenders are restricted, credit demand does not disappear; it shifts to higher-cost, less regulated alternatives with fewer consumer safeguards.

Affordability should not come at the expense of access or security. Policymakers should carefully consider how these combined measures could unintentionally erode the financial protections and pathways that community banks and credit unions have long provided to America's most vulnerable communities.

Banks and credit unions often fall on opposite sides when it comes to major financial policy. But with regard to the Credit Card Competition Act, or CCCA, we are united and deeply concerned.

This bill is not about competition or consumer protection. It is a retailer-driven rewrite of the credit card system that would weaken military families' financial security while delivering billions in guaranteed savings to large corporate retailers. Congress should reject it.

Military families depend on specialized financial products offered by defense credit unions and military-serving banks: low-interest, no-annual-fee credit cards; deployment-relief loans; debt consolidation programs; emergency assistance; and financial counseling. These are not add-ons, they are core readiness tools.

Interchange revenue plays a role in institutions' ability to offer specialized services. The CCCA would sharply reduce that revenue and impose rigid payment-routing mandates, forcing institutions, especially small, on-base credit unions and community banks operating on thin margins, to cut back. That means tighter credit, fewer benefits, and the elimination of products service members seek out and rely on.

For junior enlisted personnel and military spouses managing irregular pay, frequent relocations, and deployment-related expenses, reduced access to affordable credit can mean fewer options for emergencies, homeownership, or small-business formation.

The Department of Defense has long recognized that financial stability is inseparable from military readiness. This bill moves in the opposite direction.

In an era of escalating cyber threats, strong fraud prevention and payment security are essential. And yet, the CCCA would violate those safeguards by forcing card issuers to route transactions through merchant-selected networks rather than the most secure available options.

That shift increases risk of fraud, particularly for deployed service members operating overseas. Financial disruptions during deployment are not minor inconveniences; they distract from mission focus and readiness. Weakening payment security to lower retailer costs is not reform. It is risk-shifting.

The Congressional Research Service has already warned that routing mandates could increase fraud while offering no clear evidence that savings would reach consumers.

Interchange revenue supports credit card rewards and consumer benefits (e.g., cash back, travel points, zero-fee accounts) that help families manage rising costs. Cut that revenue, and rewards disappear. Costs reemerge through higher interest rates or new fees.

Consumers value these benefits. Both national bank and credit union associations have highlighted that a 2024 Morning Consult survey found 79% of consumers have at least one rewards credit card; 88% value credit card rewards; and consumers would be disappointed by a 3-to-1 margin if rewards were eliminated due to government action.

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Not to mention, lower-income households would be hit hardest. Research shows 77% of cardholders earning under $50,000 carry a rewards card. These are not luxury perks; they are budget tools.

History makes it clear that consumers will not see savings at the register. When debit interchange fees were capped under the Durbin Amendment, promised consumer savings failed to materialize. The Federal Reserve Bank of Atlanta found that roughly 75% of merchants did not pass savings on to consumers, and many raised prices instead.

Banks responded by cutting free checking and rewards. Institutions subject to the cap were 35% less likely to offer free checking, and debit rewards largely vanished.

The result: fewer benefits, higher banking costs and no meaningful price relief. The CCCA would repeat those failures, this time with direct consequences for military families.

Recent research reinforces these concerns. A new study conducted by the Electronic Payments Coalition finds that 82% to 88% of open credit card accounts would effectively lose access under a 10% APR cap; nearly all accounts associated with credit scores below 740 would be closed or severely restricted; 175 to 190 million Americans could lose credit card access nationwide; lower-income households and young consumers would be most affected; and consumers shut out of credit cards would likely turn to higher-risk alternatives, including payday lenders, title lenders, and unregulated online lenders charging triple-digit rates.

Despite its branding, the CCCA does not promote competition. It advantages the largest retailers, big-box stores, and e-commerce giants at the expense of community-based financial institutions and small businesses.

Academic research shows that nearly all savings from the bill would accrue to retailers with $500 million or more in annual sales, while small businesses could lose access to hundreds of billions of dollars in revolving credit and up to $1 billion in rewards value.

This is not market reform. It is a mandated redistribution from community lenders and consumers to retail conglomerates.

Community banks, credit unions, and national trade associations, groups that often disagree, are aligned in opposing the CCCA.

When organizations across the financial system raise the same concerns, Congress should take note.

At its core, the Credit Card Competition Act is a policy choice about who bears the cost. It shifts economic risk onto military families and community institutions while delivering guaranteed gains to large retailers.

Our service members already sacrifice enough. They should not become collateral damage in a corporate lobbying fight.

Congress should reject the CCCA and work with those who actually serve military communities on real solutions that strengthen competition, protect consumers and preserve financial readiness.