> Second, we contribute to the literature on reward credit cards, which has largely focused on interchange fees as a source of funding for credit card rewards.

> Second, we contribute to the literature on reward credit cards, which has largely focused on interchange fees as a source of funding for credit card rewards. Interchange fees get passed through to merchants, which potentially respond by increasing retail prices for all consumers. Thus, credit card rewards might to some extent be funded by cash and debit card users who pay higher prices without receiving any rewards to compensate. > Finally, we study the geographic distribution of net rewards across ZIP codes and investigate whether the large aggregate transfer induced by credit card rewards is correlated with socio-demographic variables. We find that average net rewards are higher in ZIP codes with higher education levels, with a higher average income, and with a lower share of Black residents. Credit card rewards thus transfer income from less to more educated, from poorer to richer, and from high- to low-minority areas, thereby widening existing spatial disparities. Reward cards are absolutely disgusting, and too few people understand that it's another wealth transfer scheme from poor to rich. https://www.federalreserve.gov/econres/feds/files/2023007pap.pdf https://www.federalreserve.gov/econres/feds/files/2023007pap...