In July, the Federal Reserve Bank of Boston released a paper [highlighting the social inequity of credit cards rewards programs. It found low income consumers were paying off credit card debt and, in doing so, lining the pockets of the rich who had enrolled in such programs.
However, the figures the Boston Fed originally estimated were recently reduced after some criticism of its methods. It now estimates poor households – those who bring in less than $20,000 a year – pay $21 a year into programs that reward consumers for taking on credit card debt, while rich consumers – those whose household income is over $150,000 – earn $750 per year. Originally, the paper said those figures were $23 and $756, respectively.
The changes came about after consumer advice website Nerdwallet.com questioned why the study included housing costs, auto payments and tuition for higher education in its data. The Boston Fed removed the housing information, but kept the other categories because consumers, who regularly take on credit card debt, pay for those things.
Often, consumers with low incomes are unable to qualify for credit card rewards programs because their credit scores are too low.