How Do Credit Card Companies Make Their Money?
Posted by DoItLikeThat in CreditHave you ever wondered how credit card companies can afford to offer you cash rewards and airline miles and all the goodies that go with using their credit cards? When you compare credit cards and search for the best credit card, do you marvel at the 0% interest rate offers, and ponder how they can manage with people who pay their accounts in full without incurring any interest charges? If you’ve been wondering how credit card companies make their money, keep on reading.
1. Fees to customers are a large part of credit card company income. Annual fees, late fees, finance fees, transaction fees - they take a small bite out of your monthly income, but they’re a large chunk of incoming cash for the issuing company. Consider that you are one of millions of customers who are paying those fees and you begin to see just how large that income can be.
2.Merchant fees are a second slice of the income pie. Each time you make a purchase on plastic, the merchant that made the sale to you pays a transaction and servicing fee to the credit card company. If you spend
