Who Actually Pays For Credit Card Rewards?
May 23, 2023
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as posted by the channelAbout 90% of all credit card spending is on rewards cards like Delta SkyMiles, Chase Sapphire Preferred or American Express Platinum. And these cards are hugely popular for a reason: you can earn cash back, upgrades on flights and many other perks. In 2019, about $35 billion in rewards was handed out to customers around the country. But how are banks paying for it all? A majority comes from interest earned from low-income consumers who revolve balances on a monthly basis. The rest is from merchant fees and things like annual, over-the-limit or foreign transaction fees. Some economists claim there's an annual redistribution of more than $15 billion from less to more educated, poorer to richer and high to low minority areas - widening existing disparities.
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Produced and Edited by: Emily Lorsch
Senior Managing Producer: Tala Hadavi
Animation: Alex Wood, Jason Reginato and Christina Locopo
Additional Camera: Magdalena Petrova
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Who Actually Pays For Credit Card Rewards?
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