Who Actually Pays For Credit Card Rewards?

About 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. Chapters: 00:00 — Introduction 01:51 — The business of credit cards 04:01 — How Americans spend 07:35 — Redistribution 12:32 — Solution Produced and Edited by: Emily Lorsch Senior Managing Producer: Tala Hadavi Animation: Alex Wood, Jason Reginato and Christina Locopo Additional Camera: Magdalena Petrova