Report on banking and credit card fees shows rich benefit more than poor

A recent report has found that higher-income households are much more likely to use credit cards and reap rewards while lower-income households are more likely to use debit cards and incur fees.

The centerpiece of this report, which was authored by Alexei Alexandrov, is a phone survey of 1,000 households conducted in February 2025. Much of the rest of the data comes from various publicly-available federal government sources, including the Census, the Federal Reserve System, and the Consumer Financial Protection Bureau.

The report discusses American households’ payment choices on everyday purchases, and the financial services directly associated with these payment choices – primarily credit cards and debit cards, including the associated bank checking accounts.

“Households with high savings are about twice as likely to use credit cards as their primary payment method, even though they don’t need to borrow,” Alexandrov said in the report. “Only about 20 percent of the households with very low savings report credit cards as their top choice.”

The report found that the average highest-income household receives about $100 a year more in rewards than they pay in fees and increased prices for their payments and transactions.

Meanwhile, the average household in the lower income brackets pays about $300-$500 per year more in fees and higher prices than they receive in rewards.

“It appears that households either use their credit card as their primary method to make purchases or for carrying balances, but not both,” Alexandrov wrote. “Most households reporting using credit cards as their primary method of payment do not have a credit card balance. Meanwhile, most households reporting using debit do have a credit card balance.”

Highest-income households are four times more likely to use credit cards for rewards than lowest-income households, the report found.

Alexandrov recommended that more should be invested in financial education and that incentives should be given to market players to educate consumers.

“It is not surprising that consumers have considerable gaps in financial education – math is hard in general, consumer finance products are nuanced, and while rules of thumb work pretty well, there is always something more tailored that might work for a particular household in a particular situation,” he wrote.

“Reaching teenagers in high schools might be the most opportune time for structured financial education. This is already the time when kids have some concept of money, and will benefit from lessons, especially if one tailors lessons to issues particularly relevant at the moment, such as college choice (and whether to go to college) and student loans.”