If my American Express bill is paid monthly, in full, how does the company make any money? It may be a dumb question, but I'm very curious.
2006-09-28 15:31:04 · 10 answers · asked by femaleofvirtue 1 in Business & Finance ➔ Credit
Because if you ever miss a payment, they come and take everything from you and sell it at auction. :-)
2006-09-28 15:33:17 · answer #1 · answered by Screwball 4 · 0⤊ 0⤋
They get percentage everytime you use the card at a store. In fact, they charge more than Visa and MC!!! That is why a lot of stores will not accept American Express.
So, they win all the way around.
Of course there are LOTS of people that do not pay their fee in full and they get the interest from them. Of course late payment fees really help them. But part of that money is used to pay off bad-debtors. These are people who declare bankruptcy. Each credit card company has to keep money in reserve for these people. ;)
2006-09-28 15:40:13 · answer #2 · answered by The Ultimate Nerd 4 · 1⤊ 0⤋
American Express collects a service charge from the merchants who accepts their cards of like 5% of every sale transaction that is presented through the American Express credit system.
The money-making potential is achieved through the sheer volume of credit sales transactions that American Express processes on a GLOBAL basis among multinational merchants and small businesses.
The road to wealth is consistently built on pennies, nickels, and dimes and interest revenue, if applicable.
2006-09-28 21:12:37 · answer #3 · answered by DaMan 5 · 1⤊ 0⤋
it's pretty much the same way every other company does. they give you a line of credit on the card and then they start charging you interest on what you buy with the card in addition to fees for having the cards. so when you pay your bill each month, whatever is left that you havent paid is what they put interest on and thats how the cycle keeps on going till youve paid it all. my details may be kinda sketchy (i must admit i dont own a credt card so forgive me if i have misled you )
2006-09-28 15:43:21 · answer #4 · answered by xodusj 2 · 0⤊ 1⤋
There are many different ways. Some of them are:
Everytime you charge something to the card, American Express charges the merchant a percentage of the transaction.
Miss a payment, they hit you with a "finance charge".
Annual fees charged to cardholders.
2006-09-28 15:36:24 · answer #5 · answered by troythom 4 · 1⤊ 0⤋
It's none of that well a little bit. They sell your debt instrument(your outstanding balance plus interest) for cash to an Investor. They get out of the loan by cashing out. They make their money back fast. Additionally if you default the investor writes it off as a loss. You will always pay more for credit, somehow someway they will get the cash and reinvest it elswhere while we pay for it 5-10 years later when all that stuff was paid for the 2nd year into it.
2006-09-28 16:02:34 · answer #6 · answered by mikey 4 · 0⤊ 1⤋
LOL gooood question!! I have Amex blue with rewards. I pay in full every month and yeah sometimes I wonder about it. But they are right that Amex charge more than other cc companies to businesses who accept cc. I usually have Amex as my first method of payment then if they don't accept it, I use my Visa..
2006-09-29 08:02:19 · answer #7 · answered by KoKo 2 · 0⤊ 0⤋
You are one of the few people that actually pay in full each month. I run credit reports daily as I am in Finance. I'd guess that 95% of the people I run have credit card debt.
2006-09-30 07:11:28 · answer #8 · answered by Ann507 2 · 0⤊ 0⤋
The annual fee is exhorbitant. They charge the vendor a small fee when you use the card and...be late just once with that payment and see what kind of late fees they hit you with. Ouch!
2006-09-28 15:40:05 · answer #9 · answered by ? 2 · 1⤊ 0⤋
They charge the merchants a percentage for each use of a card and they charge you annually for using your card.
2006-09-28 15:39:27 · answer #10 · answered by Buzz s 6 · 1⤊ 1⤋