{"id":16127,"date":"2010-07-27T20:00:32","date_gmt":"2010-07-28T00:00:32","guid":{"rendered":"\/\/www.askmrcreditcard.com\/news\/?p=16127"},"modified":"2010-07-27T20:00:32","modified_gmt":"2010-07-28T00:00:32","slug":"oh-no-reverse-robin-hood-again","status":"publish","type":"post","link":"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/","title":{"rendered":"Oh No, Reverse Robin Hood Again!"},"content":{"rendered":"

It’s that time again.\u00a0 Time to hear how evil reward credit cards are.\u00a0\u00a0\u00a0 They are so evil that they act like a “Reverse Robin Hood”.\u00a0\u00a0 We all know Robin Hood, the guy who steals from the rich and gives to the poor.\u00a0\u00a0 What could be worse than a Reverse Robin Hood, something that steals from the poor and gives to the rich.\u00a0\u00a0 You Bastards!<\/p>\n

The Federal Reserve Sells It<\/strong><\/p>\n

The geniuses at the Federal Reserve Bank of Boston came up with a study that claims that reward cards actually take money from the poor and give to the rich<\/a>.\u00a0\u00a0 I do not use the term geniuses lightly, as they include plenty of math like this:<\/p>\n

\"\"<\/a><\/p>\n

Hence indeed.\u00a0\u00a0 The last time we looked at the Reverse Robin Hood argument was in response to the merchants fight against interchange fees.\u00a0\u00a0 You can read My Rebuttal To The Case Against Swipe Fees here<\/a>.\u00a0\u00a0\u00a0 Fortunately, the authors of the Fed report do not rely on interchange fees to support their conclusion as they write; “Our analysis of the transfers among consumers requires only the merchant fee and reward rate and not the inclusion of the interchange fee” <\/em>(pg. 15).<\/p>\n

With merchant sponsored interchange fee propaganda off of the table, the authors can go on to show with great mathematical detail how those who receive reward card benefits tend to be well off, while those who pay with cash are not.\u00a0\u00a0\u00a0 Therefore, they conclude, the poor are subsidizing the rich.\u00a0 This is too much for even a liberal like myself to swallow.\u00a0\u00a0 As I wrote about the Reverse Robin Hood theory when it applied only to interchange fees, this is an argument against credit cards and virtually all financial instruments:<\/p>\n

The poor generally pay more interest and fees than rich. \u00a0\u00a0 This is true for almost all financial products from car loans to mortgages.\u00a0\u00a0\u00a0 The reasons are obvious; wealthier people are both more financially literate and are less likely to default.<\/em><\/p><\/blockquote>\n

To put it more simply, I call BS on the entire Reverse Robin Hood theory as it applies to both interchange fees and credit card rewards.\u00a0\u00a0\u00a0 Society can guarantee equality of opportunity<\/em> but not the equality of results<\/em>. \u00a0 There are plenty of poor people who still own credit cards (like me when I was in college), and plenty of rich people who pay with means other than plastic. \u00a0 \u00a0\u00a0 We each have the opportunity<\/em> to take advantage of reward cards, even if the result<\/em> is that some do and some don’t.\u00a0\u00a0 If the authors of the study are correct in their analysis of the data, they make a pretty strong argument for being one of the people on the receiving end of the reward subsidy.\u00a0 Your only takeaway should be to ensure that you are maximizing your rewards from your credit card portfolio, while never paying credit card interest or fees.<\/p>\n

Unfortunately, they also reach policy conclusions that would be pretty nasty for us reward card aficionados, and believers in the free market in general.\u00a0\u00a0\u00a0 For example, they propose the regulation of both interchange fees and rewards.\u00a0\u00a0 In wording that will cause the brains of Joe The Plumber and his supporters to explode they actually suggest a policy of “redistribution” of rewards through “tax deductions for reward contributions” (pg. 35).\u00a0\u00a0\u00a0\u00a0\u00a0 They may be math geniuses, but they are completely tone deaf politically.<\/p>\n

The New York Times Buys It<\/strong><\/p>\n

The financial blog at the New York Times links to the report<\/a>.\u00a0\u00a0 They are so taken with the plight of the poor who, by paying cash, tend to miss out on rewards that they suggest:\u00a0 “some ideas for what consumers can do now to alleviate any guilt they may have about using their cards everywhere<\/em>” such as “using cash for certain purchases or at certain retailers<\/em>” and “donating some of rewards each year to nonprofit groups that help the poor or giving up the cards completely<\/em>.”<\/p>\n

I am all for charitable giving, but when I walk into a store to exchange my hard earned cash for goods and services, I am participating in a business transaction.\u00a0 I will not be using cash instead of my reward card in order to support the merchant any more than I will be giving them an extra 10% above the price because I really like them.\u00a0\u00a0 Any suggestion that people act so far outside their best interest to “alleviate their guilt” when purchasing goods and services is just nonsense.<\/p>\n

Xd def =
\nSd
\nS<\/p>\n","protected":false},"excerpt":{"rendered":"

It’s that time again.\u00a0 Time to hear how evil reward credit cards are.\u00a0\u00a0\u00a0 They are so evil that they act like a “Reverse Robin Hood”.\u00a0\u00a0 We all know Robin Hood, the guy who steals from the rich and gives to the poor.\u00a0\u00a0 What could be worse than a Reverse Robin Hood, something that steals from […]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[8],"tags":[],"yoast_head":"\nOh No, Reverse Robin Hood Again!<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Oh No, Reverse Robin Hood Again!\" \/>\n<meta property=\"og:description\" content=\"It’s that time again.\u00a0 Time to hear how evil reward credit cards are.\u00a0\u00a0\u00a0 They are so evil that they act like a “Reverse Robin Hood”.\u00a0\u00a0 We all know Robin Hood, the guy who steals from the rich and gives to the poor.\u00a0\u00a0 What could be worse than a Reverse Robin Hood, something that steals from […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/\" \/>\n<meta property=\"og:site_name\" content=\"Ask Mr Credit Card Blog\" \/>\n<meta property=\"article:published_time\" content=\"2010-07-28T00:00:32+00:00\" \/>\n<meta name=\"author\" content=\"Jason Steele\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Jason Steele\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/\",\"url\":\"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/\",\"name\":\"Oh No, Reverse Robin Hood Again!\",\"isPartOf\":{\"@id\":\"https:\/\/www.askmrcreditcard.com\/news\/#website\"},\"datePublished\":\"2010-07-28T00:00:32+00:00\",\"dateModified\":\"2010-07-28T00:00:32+00:00\",\"author\":{\"@id\":\"https:\/\/www.askmrcreditcard.com\/news\/#\/schema\/person\/18331587d05ff4eaeee29fd913227597\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.askmrcreditcard.com\/news\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Oh No, Reverse Robin Hood Again!\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.askmrcreditcard.com\/news\/#website\",\"url\":\"https:\/\/www.askmrcreditcard.com\/news\/\",\"name\":\"Ask Mr Credit Card Blog\",\"description\":\"Just another WordPress site\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.askmrcreditcard.com\/news\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.askmrcreditcard.com\/news\/#\/schema\/person\/18331587d05ff4eaeee29fd913227597\",\"name\":\"Jason Steele\",\"url\":\"https:\/\/www.askmrcreditcard.com\/news\/author\/jsteele\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Oh No, Reverse Robin Hood Again!","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/","og_locale":"en_US","og_type":"article","og_title":"Oh No, Reverse Robin Hood Again!","og_description":"It’s that time again.\u00a0 Time to hear how evil reward credit cards are.\u00a0\u00a0\u00a0 They are so evil that they act like a “Reverse Robin Hood”.\u00a0\u00a0 We all know Robin Hood, the guy who steals from the rich and gives to the poor.\u00a0\u00a0 What could be worse than a Reverse Robin Hood, something that steals from […]","og_url":"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/","og_site_name":"Ask Mr Credit Card Blog","article_published_time":"2010-07-28T00:00:32+00:00","author":"Jason Steele","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Jason Steele","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/","url":"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/","name":"Oh No, Reverse Robin Hood Again!","isPartOf":{"@id":"https:\/\/www.askmrcreditcard.com\/news\/#website"},"datePublished":"2010-07-28T00:00:32+00:00","dateModified":"2010-07-28T00:00:32+00:00","author":{"@id":"https:\/\/www.askmrcreditcard.com\/news\/#\/schema\/person\/18331587d05ff4eaeee29fd913227597"},"breadcrumb":{"@id":"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.askmrcreditcard.com\/news\/oh-no-reverse-robin-hood-again\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.askmrcreditcard.com\/news\/"},{"@type":"ListItem","position":2,"name":"Oh No, Reverse Robin Hood Again!"}]},{"@type":"WebSite","@id":"https:\/\/www.askmrcreditcard.com\/news\/#website","url":"https:\/\/www.askmrcreditcard.com\/news\/","name":"Ask Mr Credit Card Blog","description":"Just another WordPress site","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.askmrcreditcard.com\/news\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.askmrcreditcard.com\/news\/#\/schema\/person\/18331587d05ff4eaeee29fd913227597","name":"Jason Steele","url":"https:\/\/www.askmrcreditcard.com\/news\/author\/jsteele\/"}]}},"wps_subtitle":"","_links":{"self":[{"href":"https:\/\/www.askmrcreditcard.com\/news\/wp-json\/wp\/v2\/posts\/16127"}],"collection":[{"href":"https:\/\/www.askmrcreditcard.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.askmrcreditcard.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.askmrcreditcard.com\/news\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.askmrcreditcard.com\/news\/wp-json\/wp\/v2\/comments?post=16127"}],"version-history":[{"count":0,"href":"https:\/\/www.askmrcreditcard.com\/news\/wp-json\/wp\/v2\/posts\/16127\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.askmrcreditcard.com\/news\/wp-json\/wp\/v2\/media?parent=16127"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.askmrcreditcard.com\/news\/wp-json\/wp\/v2\/categories?post=16127"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.askmrcreditcard.com\/news\/wp-json\/wp\/v2\/tags?post=16127"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}