'Really kind of disgusting': This YouTuber explains ‘why it costs more to be poor’ — and breaks down why the cards are stacked against lower-income Americans

O’Brien calls them “really kind of disgusting” and “predatory,” since lenders can potentially charge you fees equivalent to a 400% or 500% APR in exchange for a couple weeks of breathing room. What’s more, dependence on these loans over time can create a vicious cycle of debt, he notes.

Plus, if you can’t pay off your loan on time, the lender could try to withdraw funds directly from your bank account or even outsource your debt to a debt collector.

4 Motor vehicle tickets and assorted fines

O’Brien uses the example of a $100 parking ticket. No matter who gets it, that ticket will set them back a Benjamin but it hurts a poor person — making, say, $400 a week — much more if you look at the fine as a proportion of their income.

That said, there have been some exceptions provided for low-income motorists in cities such as Chicago. Under the Windy City’s Clear Path Relief Program, people who pay tickets accumulated in the last three years are forgiven for all older violations.

5. Regressive taxes

Regressive taxes, which are taxes that get assessed regardless of income, also tend to hit lower-income folks harder since they take a larger chunk out of their paychecks.

O’Brien names the infamous Philadelphia “soda tax,” which was instituted in 2017 to improve people’s diets.

It tacks on an extra 1.5 cents per ounce on sugar- and artificially sweetened beverages, which means if you’re purchasing, say, a 64-ounce bottle of Pepsi that originally cost $1.50, you end up shelling out about $2.50 instead.

6. Credit card processing fees

O’Brien calls credit cards a “secret tax” because many consumers don’t realize how much they’re paying to use them (or not use them) at the checkout counter.

He references a Boston Fed study from 2020, which found higher-income Americans pay $13 less on average through retail prices, while lower-income consumers pay $0.60 more. This is because merchants have to pay processing fees every time you purchase items with a credit card — and pass the costs onto the consumer, by way of higher prices.

Now, higher-income consumers, who are more likely to qualify for and use credit cards to earn cashback, points and Air Miles, typically offset the costs through their rewards. But lower-income folks, who are less likely to qualify for credit cards, or cards with higher reward levels, are more likely to pay with cash or debit while still taking on the higher costs.