Who really pays for your 2% cash back?

Every time you swipe your credit card, money changes hands long before your rewards hit your account. In this episode of Econ 101, Kevin Thompson breaks down where merchant fees go, how banks and payment processors make billions, and why your airline miles and cash back aren't actually free.

Topics covered:

How credit card transactions work

What interchange fees really are

Why merchants accept credit cards

Who ultimately pays for rewards

Why carrying a balance can erase any benefit from cash back

If you've ever wondered how banks can afford to hand out points, airline miles, and cash back while reporting record profits, this episode follows the money.

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00:00 – Who Really  ...