Who Actually Pays For Credit Card Rewards

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About 90% of all credit card spending is on rewards cards like Delta SkyMiles, Chase Sapphire Preferred or American Express Platinum. And these cards are hugely popular for a reason: you can earn cash back, upgrades on flights and many other perks. In 2019, about $35 billion in rewards was handed out to customers around the country. But how are banks paying for it all? A majority comes from interest earned from low-income consumers who revolve balances on a monthly basis. The rest is from merchant fees and things like annual, over-the-limit or foreign transaction fees. Some economists claim there's an annual redistribution of more than $15 billion from less to more educated, poorer to richer and high to low minority areas - widening existing disparities. • Chapters: • 00:00 — Introduction • 01:51 — The business of credit cards • 04:01 — How Americans spend • 07:35 — Redistribution • 12:32 — Solution • Produced and Edited by: Emily Lorsch • Senior Managing Producer: Tala Hadavi • Animation: Alex Wood, Jason Reginato and Christina Locopo • Additional Camera: Magdalena Petrova • » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC • » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision • About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. • Connect with CNBC News Online • Get the latest news: https://www.cnbc.com/ • Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC • Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC • Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC • Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC • #CNBC • Who Actually Pays For Credit Card Rewards?

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