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How Much Credit Card Rewards Cost The Poor

Monday, July 26, 2010 - 8:42 PM
The NYT Bucks Blog reports on a Federal Reserve study which makes a case against reward credit cards:
the reward programs create “an implicit money transfer” to credit card users from noncard users (i.e. cash payers) because of the across-the-board price increases merchants put in place to cover the costs of accepting the cards.

By this logic they'll be making claims that paying interest on deposits transfers wealth from the poor to the rich.
Ken TuminKen Tumin5,441 posts since
Nov 29, 2009
Rep Points: 123,651
1. Tuesday, July 27, 2010 - 11:23 AM
By this logic they'll be making claims that paying interest on deposits transfers wealth from the poor to the rich.

Yes.  The thoughts and ideas taking hold, lately, against business, hard work, and a very basic ability to do math, are very concerning.

Here is what one of the commentors said in the link to that article, Ken:

2. P. Henry San Rafael, CA July 26th, 2010 5:35 pm This whole premise -- that the wealthy get benefits at the expense of the poor -- is one of those things that sounds credible and newsworthy, until it is put into the surrounding context of the overall economy and social infrastructure. I don't doubt the facts here, but there are plenty of similar examples and counterexamples. For example, the rich get interest on their higher bank balances, while the poor, if they have bank accounts at all, pay maintenance fees on their low balances, not to mention outrageously high fees for overdrafts, etc. Does this mean we should eliminate bank interest, or require it be the same for all balances?

The poor often can't afford to buy (or store) groceries in bulk at a discount, and of course are priced out of healthier alternatives at every turn. The "rich" get better elementary schools (because they can afford to put parental time into their kids' schools, while the "poor" are too busy working to make ends meet.

On the other hand, we have all manner of subsidies and entitlement programs that do help the poor, and are paid for by taxes which are, in absolute terms, disproportionately paid by the "wealthy".

The real point is this when it comes to social "equalizations": The framers of our (U.S.) constitution idealized a level playing field for all; they did not, however, envision that everyone should or would win or lose equally. Recommend Recommended by 55 Readers
MikeMike327 posts since
Feb 22, 2010
Rep Points: 875