First, credit card terms that are offered to more financially sophisticated consumers differ significantly from those offered to unsophisticated customers, where sophistication is measured as educational attainment, holding other observable household characteristics constant.
Less-sophisticated households are much more likely to be offered back-loaded or hidden fee structures, such as low introductory (or teaser) rates. However, after the introductory period, these cards have higher rates, late fees and over-limit fees. In contrast, cards that are offered to sophisticated customers rely much less on back-loaded fees and instead have higher upfront fees, such as annual fees. We also show that the worse the credit terms, the more likely they are to appear either in small font or on the last pages of the offer letter.

Second, we find that even when holding constant the observable characteristics of customers, card issuers attempt to screen households based on unobservable characteristics by offering a menu of cards with varying degrees of back-loaded fees and different rewards programs. Cards with rewards programs that appeal to less-sophisticated consumers also have more back-loaded terms. This explicit targeting of less-sophisticated households with more back-loaded or shrouded credit terms is concerning because a number of prior studies on the demand side of the credit card industry have shown that credit card users suffer when they choose these contracts.

Third, we document an important trade-off between borrower sophistication and credit risk that has not been previously explored in the literature. A lending strategy that selects for less-sophisticated customers via back-loaded or shrouded attributes might increase rents from these consumers over the short run, but it might also expose the lender to higher credit risk over the long run if these customers do not understand the true cost of credit. We find that banks proactively increase their reliance on back-loaded terms when the credit risk of consumers decreases

http://www.nber.org/papers/w22360.pdf

Researcher in capitalism must behave like serial killer buddy, you must never tell outsiders about your friend deeds and you must also constantly make some small tips to him about places where to hide bodies, to remember to clean blood from axe with cloth and always remind them to hunt for dummies first, they are easy and are not much worse on the plate.