The Problem with Rewards Credit Cards(theatlantic.com)
theatlantic.com
The Problem with Rewards Credit Cards
https://www.theatlantic.com/culture/archive/2025/07/sapphire-reserve-credit-card-rewards/683613/
3 comments
While this rightfully exposes the games that credit card companies play for you to get your points, the real problem is that credit card rewards are yet another transfer of wealth from poor to rich, and affect everyone, even if you use cash.
https://www.federalreserve.gov/econres/feds/files/2023007pap...
> Comparing cards with and without rewards, we find that, regardless of income, sophisticated individuals profit from reward credit cards at the expense of naive consumers.
> We estimate an aggregate annual redistribution of $15 billion from less to more educated, poorer to richer, and high to low minority areas, widening existing disparities.
> 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.
https://www.federalreserve.gov/econres/feds/files/2023007pap...
> Comparing cards with and without rewards, we find that, regardless of income, sophisticated individuals profit from reward credit cards at the expense of naive consumers.
> We estimate an aggregate annual redistribution of $15 billion from less to more educated, poorer to richer, and high to low minority areas, widening existing disparities.
> 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.
I try to keep it simple: I have the $95/year Chase Preferred. I definitely get way more than $95 every year in rewards. It's also helpful for auto converting currency when abroad (the fees add up like crazy if you let individual services do this for you.)
I'm currently in Paris on a flight I booked with points but I use this card basically exclusively for all my expenses (except ones that have to be paid with cash/bank acct)
I recently tried to get one of these higher tier cards like the Reserve just for the lounge access and even though I have near perfect credit and longtime customer they wouldn't give me the joining bonus. It's not worth it overall, especially with these changes.