Credit Card Points Are a Transfer from the Broke to the Comfortable
4 hours ago
- #financial inequality
- #credit cards
- #consumer finance
- Credit card rewards are funded by high interest rates (average 25.2% APR) and fees, primarily paid by cardholders who carry balances.
- Federal Reserve research indicates a transfer of about $15.1 billion annually from less sophisticated to more sophisticated cardholders, often from poorer to wealthier demographics.
- Rewards incentivize credit card usage, boosting adoption and maintaining profitability for banks, but rely on a system that redistributes money from vulnerable users.