Credit card rewards points are a transfer of wealth from the poor

A recent Times piece on credit card rewards points explains how credit cards rewards programs are a mechanism that allows credit-card users to leech wealth from cash-users. These rewards programs have always seemed like free money to me, which only means the costs are hidden or borne by others. In this case, credit card companies charge higher fees to merchants in order to subsidize these rewards programs, and merchants in turn charge higher prices. Credit-card users can offset the higher prices by cashing in reward points, while those who primarily use cash (generally those with lower income) cannot. As a result:

According to a 2010 policy paper by economists at the Federal Reserve Bank of Boston, the average cash-using household paid $149 over the course of a year to card-using households, while each card-using household received $1,133 from cash users, partially in the form of rewards.