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About 80% of all American households own a credit card, and more than 90% of all credit card spending earns some kind of reward bounty (as reported in The Wall Street Journal; subscription required), whether it’s cash back, free flights, or various other benefits. There’s a reason thousands of people watch YouTube videos of other people unboxing the Chase Sapphire Reserve® card: Everyone wants free money.
But nothing is free. Banks at least partially finance credit card rewards through a fee on the store that accepts your card. The merchants then turn around and raise prices on shoppers. (These “interchange” fees are just one way that banks earn money—they also profit from charges such as interest, annual fees, and late-payment fees.)
The truth is, everyone pays for a tiny fraction of the ever-increasing rewards pie. But for the millions of poorer Americans who don’t have the credit score and history to obtain a premium card, this situation is gallingly inequitable.
The game isn’t fair. But does that mean you shouldn’t play?
Source: NY Times – Wirecutter
Keyword: The Credit Card Rewards Game Is Unfair. But Is It Unethical?