[ad_1]
Capital One Financial is reportedly laying plans to purchase Discover Financial Services in a $35 billion deal and it’s poised to significantly shift the way consumers make credit card payments in the near future.
Per AP News, the two credit card companies is likely to enter into a deal under which an all-stock transaction will allow Discover Financial shareholders to receive Capital One shares priced at just $140. According to the outlet, that’s a significant premium compared to Discover’s $110.49 shares.
Although that may be good news to some customers, some finance analysts and lawmakers are questioning what this merger will do to already struggling credit card holders.
Sen. Elizabeth Warren, D-Mass., an advocate for more stringent financial policy, raised concern about the deal.
“The merger of @CapitalOne and @Discover threatens our financial stability, reduces competition, and would increase fees and credit costs for American families,” Warren posted on X.
As some consumer advocates point out, the merger could be the start of a larger move for credit card companies to monopolize the industry and make interest prices, incentives and other benefits less competitive.
“We should be worried about the functionality of the credit card market in general. This merger probably heightens that,” said Adam Rust, director of financial services at the Consumer Federation of America in a recent interview with NBC News.
A recent Consumer Financial Protection Bureau report revealed that the , which found 25 largest credit card issuers hiked interest up eight to 10 points higher than small- and medium-sized banks and credit unions for their customers.
“All those reasons point to some kind of imbalance, and it’s favoring large credit issuers,” Rust told the outlet. “It has to do with their marketing budgets, their ability to get their brands in front of consumers on television or send out mailers.”
[ad_2]
Source link
