Capital One-Discover merger could put a bigger squeeze on credit card users, experts warn

Capital One’s $35.3 billion deal to buy Discover is a long way from being completed.

But consumer advocates and some lawmakers are already raising questions about how the proposed merger could affect credit-card users — many of whom are already under pressure from high interest rates and record debts.

Sen. Elizabeth Warren, D-Mass., a longtime proponent of tighter financial regulation, called for federal officials to block 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, who is also the chair of the Senate Banking Subcommittee on Economic Policy, posted on X.

Industry groups and experts warned against a shrinking credit card market dominated by a handful of large players, which they said are more likely to squeeze customers.

“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, a national network of consumer advocacy groups.

While analysts generally say the merger stands a decent shot at securing regulatory approval, “it would face gale-force headwinds from a Washington that is deeply skeptical of consolidation [and] anxious regarding consumer-facing issues in an election year,” Isaac Boltansky, director of policy research at BTIG, a global financial services firm, said in a statement.

But blocking the tie-up could be seen as helping Visa and Mastercard, the credit card giants some policymakers have criticized as a duopoly in need of a shakeup from more serious rivals.

Both Visa and Mastercard grew their revenues by 11% and 12.5%,