What you're giving is a rationalization for why the economic landscape of credit cards looks the way it does, which is useful for understanding it, but not at all the same thing as a justification for that being desirable for society as a whole.
We have a perfectly fine mechanism for making lending cheaper for people who pay on time: Interest rates. There's no economic need for tangling all of that up with rewards/cashback rates.
> It was expensive, but for my specific situation, the travel benefits were basically making me $500 a year, alot of money for me.
While I also greatly benefit from the system myself I still consider it a massive resource sink for society at best, and borderline predatory lending behavior at worst, and would gladly see it disappear the same way it has in the EU.
2) getting the value of the card is contingent on spending more money. A poor person with fewer expenses won’t get nearly as much benefit
3) let’s not ignore the elephant in the room which is credit cards trying everything to get you to make minimum payments to prey on the financially illiterate, which again, are heavily concentrated in the poor
People with good credit have access to better cards. It’s about people who pay their shit on time, not wealth.