This Week in Credit Cards: Rate Hikes Crush Card Spend

A new report from the Federal Reserve Bank of Boston examines the relationship between an increase in credit card annual percentage rates and cardholder spending behaviors.

Credit card rates have been a hot topic in 2026. President Donald Trump called for a 10% cap on rates earlier this year. And a number of politicians — not just those in the Republican party — were quick to support that idea. 

This Week in Credit Cards, we learn that APR increases actually impact spend, Visa combats fraud, new card launches, and huge news from down under. Catch up here: https://t.co/rAZJmv9Hl9 pic.twitter.com/J2frBm1YRC

— CardRates Industry News (@CardRatesNews) April 3, 2026

But the study from the Federal Reserve Bank of Boston shines a light on just how sensitive many cardholders can be to minor fluctuations issuers make to rates. The study revealed that consumers reduce their credit card spending by 8.7% in the month following one in which the rate on their credit card went up by a single percentage point.

Should politicians continue to consider a 10% rate cap on card rates, they would be wise to take a look at the study from the Boston Fed. 

The report’s findings also showed the extent to which people rely on their credit cards. In 2022, consumers in the U.S. spent more than $5.8 trillion on purchases with their credit cards, which was roughly 20% of all consumer spending for the year.

Visa is leveraging the power of artificial intelligence in an effort to cut down on many of the frustrations that can pop up in different elements of the credit card dispute process. The leading card network launched six new tools this week that card issuers and merchants can use to make their dispute programs more efficient and cost effective.

Andrew Torre, President of Value-Added Services at Visa, told CNBC that the back-office systems that entities involved in the payments process use when it comes to managing disputes are largely manual. 

Visa aims to address that by providing three new tools that the company specifically designed to aid merchants and three more that it built for acquirers and issuers. Companies can access some of these tools now, and Visa plans to make the rest of them available later in 2026.

Globally, Visa processed in excess of 106 million disputes in 2025, which represents an increase of 35% since 2019, according to Torre. He told CNBC the payment network wants to see that growth rate decrease. 

U.S. Bank and Amazon made a splash in the payments world this week. According to a press release from the financial institution, the global e-commerce company is partnering with U.S. Bank on two new credit cards for small businesses.

Both the Prime Business Card and the Amazon Business Card give cardholders a straightforward way to earn rewards on their purchases. Those who are Prime members can use the Prime card to access 5% back on purchases they make from Amazon. And the Amazon card gives those who aren’t Prime members 3% back.

U.S. Bank works with more than 1.4 million clients in the small business sector to provide them with a variety of financial solutions, according to the company’s release. But that number stands to grow due to the bank’s new partnership with Amazon.

The new cards will run on the Mastercard network. Amazon had previously partnered with American Express to issue a small business card. A spokesperson for American Express told Bloomberg that although the company’s relationship with Amazon is undergoing a change, the online retailer remains a vital partner.

Bank of America and Royal Caribbean Group are teaming up to offer two new credit cards that allow vacationers to earn rewards when they use them for everyday purchases. Both cards boost the amount of points cardholders can earn when they make purchases with the Royal Caribbean Group brands, including Celebrity Cruises, Royal Caribbean, and Silversea. 

The Royal One card comes with no annual fee, but consumers who opt for the Royal One Plus card — which includes additional perks — will face a yearly fee of $99.

Consumers continue to value the rewards programs their credit card providers offer, according to a recent survey from the American Bankers Association. And current economic conditions in the U.S. may further motivate travelers to find ways to cut costs on their upcoming vacations. 

The new credit cards from Bank of America and Royal Caribbean Group will arrive just in time for people to use them while making their summer vacation plans. A press release from the financial institution discloses that the new cards will hit the market in the coming weeks.

Cardholders can have a disappointing experience at the point-of-sale when they find out that a business is adding to the cost of their purchase simply due to the method of payment the customer is using. Some merchants add a charge to a customer’s bill when they pay with a credit or debit card, but that practice will soon come to an end in Australia.

The Reserve Bank of Australia, which serves as the central bank for the country, announced it will no longer permit merchants to apply surcharges to card-based transactions beginning Oct. 1. The bank is also planning to lower the maximum interchange fees on both credit and debit card transactions.

In light of these changes, cardholders may see the rewards that accompany their card programs diminish. In addition, interest rates and other card fees may rise as financial institutions look to recover a portion of the revenue they stand to lose from the Reserve Bank of Australia’s move to reduce interchange fees.

We’ll return next week with another edition of This Week in Credit Cards, and we hope you will too. In the meantime, check out our social media accounts on Bluesky, LinkedIn, and X for interviews with industry insiders and more reporting on the stories impacting the credit card industry. 

Check back in with us often for coverage of the latest news and trends in the credit card world.