American consumers face increasing financial strain due to rising costs in essentials like groceries, housing, and healthcare. This strain has led to record-high credit-card debt of $1.2 trillion, with late payment rates hitting peaks not seen since the Great Recession, disproportionately affecting younger borrowers. The credit-card industry has evolved into two distinct markets, where wealthy 'transactors' enjoy rewards and benefits, while poorer consumers struggle with high-interest debt. These trends illustrate how the financial burdens of everyday Americans inadvertently support the affluent, creating a cycle of inequality in the credit system.
"If you're spending $100,000 a year, you're getting maybe $1,500 back in terms of points or cash," Aaron Klein of the Brookings Institution told me. "You're not paying taxes on that."
High costs are weighing down working-class families, while driving big rewards to rich ones. Over the past few decades, the credit-card market has quietly transformed into two credit-card markets."
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