it's not the people carrying a balance that pay for that - it's the merchants. it's an extra fee added on to the credit card fee that a merchant can't predict nor can they avoid.
As a merchant, I charged people, say... $10 for something. The fee might be 2.9%, but if it was 'rewards card' (which I can't tell ahead of time) the charge would show up as 4%.
The cost is passed on to every in the form of higher prices. The people carrying a balance have nothing to do with this. That would simply eat in to the banks' profits. Why would they just randomly give people x% of the profits from balance-accrued interest?
Hm... I wonder who gets the extra 0.1%.
Hrm.... indeed.
It's different. I've had some cards charge me > 4% - one was... 5% IIRC. I think it was an Amex.
Another group of folks who pay for the 1% cash back are the merchants who pay fees well over 1% for transaction processing. http://www.cardfellow.com/blog/credit-card-processing-fees/
Yeah, pretty much. If you are responsible, you get back 1% of all of your purchases on the CC. And in the spirit of "who pays for that", it's the folks carrying a balance who pay for the 1% cash back on everything.