2006-08-06 16:48:20 · 4 answers · asked by I-C-U 5 in Business & Finance ➔ Credit
First, they cover all the people who do not pay their bills.
The next portion goes towards normal business expenses - paying their employees' salaries, pensions, health benefits, paying for the rent and the equipment.
The rest is profit - to pay bonuses and for raises.
You're talking capitalism here. If you don't want to pay the interest, don't borrow. If you don't want to pay the penalties, pay your bills on time.
By using credit, you allow creditors to charge what they want, when they want. I dumped all my credit cards years ago. Now I use a debit card to purchase things on line, pay my bills through the bank which doesn't charge me for the service, and pay cash for almost everything else. Works great for me.
2006-08-06 16:56:03 · answer #1 · answered by CarolO 7 · 0⤊ 0⤋
Creditors (banks) are like any corporation. The vast interest and fee income is taken in as revenue and the amount left after expenses is either given back to the shareholders' or reinvested
It's actually quite amazing, Bank of America's profit margin dwarfted ExxonMobil's. But of course Exxon made quite a bit more as a monetary amount.
According to Bank of America's 10-k (Annual Report) for 2005 they had a 29.7% Gross Profit Percentage (16,868 Net Income 56,766 Revenue in millions) while ExxonMobil only recorded a 10% GPP (36,130 NI on 358,955 Revenue)
2006-08-06 17:01:49 · answer #2 · answered by Jesse 4 · 0⤊ 0⤋
They loan it out and make even more money.
2006-08-06 16:51:51 · answer #3 · answered by dudefungame 2 · 0⤊ 0⤋
They use it to pay the deadbeat's debt.
2006-08-06 16:53:39 · answer #4 · answered by Cookie 5 · 0⤊ 0⤋