What the Amex card decision means for consumers

  • All in, swipe fees generate more than $50 billion a year, yet few shoppers understand how they could be impacted by them.
  • Amex's Supreme Court win is a good opportunity to evaluate whether the rewards you are getting are worth it for you.
Credit card
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American Express had its day in court — and won. The jury is still out for consumers, however.

The Supreme Court ruled Monday that the card company’s “anti-steering” rules do not violate federal antitrust law. The rules prevent merchants from offering you discounts or incentives to use cards with lower "swipe" fees, like Visa or Mastercard.

Amex has historically charged higher swipe or interchange fees to merchants than these competitors because it delivers wealthier cardholders who spend more money, the Supreme Court said. The fees that merchants pay to process Amex transactions fund the card company's generous rewards program.

"Swipe fees are the engine that powers the whole credit card rewards game." -Matt Schulz, senior industry analyst at CreditCards.com

Further, “Amex’s business model has spurred robust interbrand competition and has increased the quality and quantity of credit-card transactions,” Justice Clarence Thomas wrote in the five to four ruling.

“This has been an ongoing battle over interchange fees,” said Joe Resendiz, a credit cards research analyst at ValuePenguin. Although for the most part, “consumers are not really aware of what goes on behind the curtain,” he added.

All in, swipe fees generate more than $50 billion a year, according to the Justice Department.

“Swipe fees are the engine that powers the whole credit card rewards game,” Matt Schulz, a senior industry analyst at CreditCards.com, said in a statement.

“If those fees had taken a hit, which was a real possibility if the ruling had gone against Amex, it would've been great news for merchants' bottom line but almost certainly would have marked the end of the golden era of credit card rewards," Schulz said.

The National Retail Federation called the ruling “a missed opportunity to take a stand in favor of free markets and bring soaring credit card fees under control.”

Credit card rewards are hugely important for consumers, yet many people remain largely confused about them and how they are paid for. That makes this a good time to evaluate whether the rewards you are getting are worth it for you, Resendiz said.

Rewards cards are meant to be enticing, yet they also often come with a catch and depending on how much you spend each month, signup bonuses and other perks don't always offset the cost of an annual fee.

For big spenders, it may be easy to rack up enough charges to reap the benefits of a rewards card and offset the fee.

On the flipside, any of the perks from a fancy credit card are quickly negated if you carry a monthly balance.