Competition has been intensifying for premium-card customers, who are lucrative because they are willing to pay hefty annual fees and spend a lot, which generates merchant fees for banks. A 10% cap on rates could make those customers even more coveted and pull major card issuers further away from people with lower credit scores.
“Rewards are funded by credit-card issuer profits. Some of that is interest.” said Matt Schulz, Chief Consumer-Finance Analyst at LendingTree.
