A new study from the Federal Reserve Bank of Boston has confirmed the theory that credit card rewards hurt the poor while subsidizing the rich.
The report, ?Who Gains and Who Loses From Credit Card Payments? Theory and Calibrations? that was released Monday, the people who do not use credit cards are subsidizing the people who do use credit cards due to the across-the-board price increases that are used to cover the additional costs of accepting the cards.
Also, it was found that the use of credit cards and rewards programs was directly correlated with income, the higher income people use credit cards and rewards programs while the lower income people do not.
After taking into consideration the rewards paid out to the credit card customers, the lowest income households ended up paying $23.00 per year while the highest income households, defined as those making $150000.00 per year or more, received a subsidy of $756.00 every year.
And the rich get richer??
Read more at The New York Times.
