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For those of us who use credit cards with rewards, the rewards significantly exceed the price increases, because most of the price increases are paid by people
by tfehring 8y ago
For those of us who use credit cards with rewards, the rewards significantly exceed the price increases, because most of the price increases are paid by people using other payment methods.
- kevin_thibedeau 8y agoThey're mostly paid by people who carry a balance and incur interest payments. They fuel the rewards programs.
- tfehring 8y agoI'm sure interest revenue plays a role in determining the rewards that are offered, but the data suggest that merchant fees, which are largely paid for by non-credit-card-using households in the form of higher prices, are a bigger contributor. The average credit-card-using household receives a net transfer of over $1,000/year from non-credit-card-using households [0] (2010). [0] https://www.bostonfed.org/publications/public-policy-discussion-paper/2010/who-gains-and-who-loses-from-credit-card-payments-theory-and-calibrations.aspx https://www.bostonfed.org/publications/public-policy-discuss...