This paper investigates the redistributive effects of reward programs in consumer credit markets, where salient benefits often mask shrouded costs. Using information on both dimensions for over 200 million U.S. credit cards and comparing reward cards with similar non-reward cards, we find that sophisticated individuals profit at the expense of naïve consumers regardless of income. To probe mechanisms, we exploit bank-initiated account limit increases and show that rewards stimulate spending across consumers but leave only naïve individuals with larger unpaid balances. Naïve consumers with multiple cards also follow a suboptimal balance-matching heuristic when repaying, incurring unnecessary costs. Banks encourage reward card usage by offering lower APRs than on nonreward cards, profiting from interest and fee charges paid by naïve consumers and interchange income generated by sophisticated individuals. We estimate an aggregate annual redistribution of $15 billion from less to more educated, poorer to richer, and high to low minority areas.

Using new comprehensive micro-data covering the Los Angeles County rental market, we study how mortgage rate changes influence rents through their effects on local sales markets. A one-standard-deviation increase in average mortgage lock-in for homes within a narrow radius of a rental listing raises rents by 4.5% and shortens time-on-market. These estimates are not confounded by differences in property characteristics, sub-market trends, or migration. Instead, they are driven by spillovers from reduced sales volume and higher prices onto rents. Spillovers are stronger in lower-socioeconomic status areas, and for multi-family buildings, which are segmented from for-sale supply. This variation contributes to diverging patterns in local rent inflation.

We use a large representative sample of individual credit bureau records to document the effect of financial distress and debt relief on divorce rates. Foreclosures increase the rate of marital dissolution, whereas Chapter 13 bankruptcies, which protect debtors from foreclosure, have the opposite effect. These financial events’ effects are distinct from health or employment-related shocks. We exploit post-disaster financial assistance programs and judicial district dismissal rates as instruments to isolate exogenous variation in foreclosure probability and Chapter 13 dismissal rates. Our findings highlight the role of financial stability and housing security as determinants of family structures and suggest that government policies that favor debt relief spill over to non-financial outcomes.