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.
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
About CNBC: From ‘Wall Street’ to ‘Main Street’ to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.
Connect with CNBC News Online
Get the latest news:https://www.cnbc.com/
Follow CNBC on LinkedIn:https://cnb.cx/LinkedInCNBC
Follow CNBC News on Facebook:https://cnb.cx/LikeCNBC
Follow CNBC News on Twitter:https://cnb.cx/FollowCNBC
Follow CNBC News on Instagram:https://cnb.cx/InstagramCNBC
Who Actually Pays For Credit Card Rewards?