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HughPickens.com [hughpickens.com] writes:

Recently, MIT economists Hong Ru and Antoinette Schoar analyzed over a million credit card mailings collected by Mintel, a company that pays people to read their junk mail. The economists scanned the terms of these offers and noted the income and education levels of recipients. Now Jeff Guo writes in the Washington Post that if you want to know what credit card companies think of you, look at the junk mail you receive from credit card companies [washingtonpost.com]. Are you “pre-screened” for lots of mileage-reward cards? Banks think you’re rich and educated. Do you mostly see offers for low-APR teaser rates? Banks think you’re poor and uneducated — and, perhaps, vulnerable to financial traps.

Cards with travel rewards epitomize the kind of product aimed at the rich and educated. It’s a fairly exclusive niche — only about 8 percent of credit card offers fall into this category. People in this demographic are the most likely to jet around, and therefore most likely to appreciate a card that will earn them frequent-flier miles. In contrast, the card offers sent to poorer, less-educated people were often loaded with risky features [editorialexpress.com]: low introductory APRs, high late fees, and penalty interest rates that kick in if you break the rules. Ru and Schoar believe that the system is tuned precisely to take advantage of those who make financial mistakes. "Backward loaded credit card features with high late fees can only be optimal [for companies] if customers do not understand their actual cost of credit," they write, using a term to describe arrangements that offer low upfront fees but higher penalty fees.

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