Your airline reward miles could vanish under a new Trump proposal

Your airline reward miles could vanish under a new Trump proposal - Trump’s Proposed Interest Rate Cap: A Potential Death Knell for Credit Card Rewards

I've been looking at the numbers behind this 10% interest rate cap proposal, and honestly, it’s a lot more complicated than just saving a few bucks on monthly finance charges. When you pull back the curtain, you see that banks rely on that interest income to keep our favorite travel perks alive. Analysts are already projecting a massive 20% to 30% drop in revenue for card issuers, which pulls the rug out from under the funding for those high-end rewards programs we all love. But here’s the kicker: it’s not just the rewards at risk, because economic models suggest up to two million people with lower credit scores might get locked out of the system entirely as lenders stop taking risks. Let’s pause for a moment and think about what

Your airline reward miles could vanish under a new Trump proposal - How Capping Bank Revenue Could Force Airlines to Devalue Loyalty Points

I’ve been looking at the balance sheets of major carriers lately, and it’s honestly wild how much they’ve become banks that just happen to fly planes. Look at it this way: nearly 40% of their annual earnings now come from selling those little digital miles to big financial institutions. But here’s the thing—if banks can’t make the same money on interest, they aren't going to pay top dollar for those miles anymore. When that cash flow starts to dry up, airlines will have to protect their margins, and they’ll likely do it by making your points worth less. I’m seeing data that suggests domestic flights could suddenly cost 15% to 25% more in miles just to keep the airlines' books balanced. It

Your airline reward miles could vanish under a new Trump proposal - The Economic Ripple Effect: Why Free Flights Depend on High-Interest Ecosystems

I've spent a lot of time looking at the "hidden plumbing" of credit cards lately, and what I found is that the system only works because one group of people is essentially paying for another group’s vacation. Think about it this way: roughly 80% of the value we get from points is actually subsidized by the people who carry a balance and pay those high interest rates every month. If you’re a "transactor" who pays in full, you’re basically a guest at a party where the "revolvers" are picking up the entire tab. But here’s the thing—the math just doesn’t hold up if you cap those rates at 10%. Standard merchant fees of 2% or 3% are nowhere near enough to cover the 10% to 12% return we usually see on a sweet business class redemption to Tokyo. And it gets even messier when you look at how airlines use these loyalty programs as collateral for their own corporate debt. If the program’s valuation drops because the bank funding dries up, an airline’s borrowing costs could jump by as much as 200 basis points, which is a massive blow to their cash flow. Banks are also going to get stingy with those big 100,00

Your airline reward miles could vanish under a new Trump proposal - Protecting Your Balance: Why Frequent Flyers Should Adopt an Earn and Burn Strategy Now

I've been looking at the numbers on these mileage balances lately, and honestly, holding onto a massive stash of points feels more like a liability than an asset right now. Think about it this way: airline miles are currently losing their worth at nearly triple the rate of regular inflation, which means that "dream trip" fund is shrinking while you sleep. Major US carriers are sitting on about $35 billion in mileage debt, and they’re looking for any excuse to wipe those obligations off their books through aggressive price hikes. We're already seeing airlines use new automated pricing tools to peg your points to as little as 0.6 cents during the holidays, a far cry from the two cents we used to aim for. I’m not sure if you’ve noticed, but trying to find