The Dark Side of Credit Card Rewards — The New York Times, 2023, 5:21 — https://www.youtube.com/watch?v=49OZIDqsksE

This video explains how credit card rewards perpetuate social class inequalities. Store owners are charged various fees when customers use credit cards (and rewards cards typically have the highest fees), so merchants often raise the price of goods and services to accommodate these extra fees, which are usually between 1.5% and 3%. When you pay in cash, you still pay the inflated price for the goods or services, but you receive no rewards or benefits. How does this relate to social inequality? Wealthier Americans are more likely to have premium rewards cards whereas poorer Americans are more likely to pay in cash, and they may be ineligible for a credit card altogether. As such, everyone pays higher prices to subsidize the rewards that primarily go to the wealthy. Yet, overall, everyone seems to be harmed by this because the average American at every income level loses more to swipe fee price hikes than they earn in rewards. However, the poorest Americans pay roughly 5x more in price markups than they will ever receive in rewards.

So what can we do? The shortfall of this compelling video is that it individualizes the solution, encouraging individuals to stop using reward cards. What structural solutions can you think of?

From the video’s description: The enticements for credit card rewards programs promise fantasies. And for the privileged members who can convert taps of plastic into points, and those points into luxury, the process can feel like digital alchemy, or at least a delightful refutation of that adage about a free lunch. But as the Opinion Video above explains, that lunch — or that points-purchased round-trip ticket to the Seychelles — isn’t really free. Which raises the question: Who’s paying for it? Well, we all are.