Credit Card Rewards Programs Shift $9.2B Annually From Poor to Rich

A Harvard Business School study reveals that credit card rewards programs result in a $9.2 billion annual wealth transfer in the United States. The mechanism works because merchants charge uniform prices to all customers regardless of payment method, effectively embedding card processing fees into retail prices. Cash-paying consumers, who tend to have lower incomes, subsidize the rewards earned by wealthier cardholders who pay the same prices but receive cashback or points. The research highlights how a system designed as a consumer perk disproportionately benefits higher-income households at the expense of those who cannot access or afford premium reward cards.