Do credit card companies make any money when people pay full balance monthly?

Question

If so, how?

Answer 1

Yes. They get a cut of every transaction you make, whether you pay the bill every month or not. The merchant pays for this. The credit company's cut can be as much as say 75 cents per transaction plus about 4% of the transaction amount.

This varies from credit card company to credit card company , and from merchant to merchant. Mom and pop shops have to pay the full fees, but huge merchants can negotiate deals to reduce the fees.

So don't worry. While your credit card company would love to charge you tons of interest, they won't cancel you for paying your bill every month.

Answer 2

Yes, card issuers earn income for every transaction in the form of what is called "merchant interchange". Merchant interchange is a fee paid by merchants that is split between the card issuing bank and the credit card network (the card associations that built the electronic payment networks, like Visa, MasterCard and American Express). This interchange fee runs between 2% and 3% of the transaction amount. Since hundreds of billions of dollars of goods and services are charged on credit cards every year, this interchange income really adds up. If a person always pays off their balance each month, but charges $1,000 a month, the card issuer will earn $180 every year on those transactions.

Answer 3

If you pay your balances every month, on-time, then the credit card companies make no money on you. That is a TINY percentage of the total customers of credit cards... I read that the average balance on credit cards (month over month) is in the thousands of dollars.

Answer 4

the merchants that use the credit card companies are charged a percentage every month/every purchase they run through so they make money regardless if you pay your balance in full or not. granted, they make nothing off you if you pay it off every month but they make something just for you using it from the merchants you purchase from.

Answer 5

Yes. The merchants that accept their cards have to pay a percentage of what is charged. In most cases it is between 1.5-3.5 percent. So when you use your credit card, it actually costs the merchant money - that's why sometimes you see a minimum charge amount.

Answer 6

Yes, many CC companies charge a fee to the business.

Ironic, isn't it...18% isn't enough.

Be advised, some (actually very few) companies will eventually find reason to terminate your card, if you always pay in full.

Flying J travel plaza's refuse to take Comdata because of the fees charged to the merchant. Comdata usage averages over $500 per day, per driver, of which there are at the very least 300K using Comdata on a daily basis. My company alone uses Comdata to the tune of over $4k a week per employee, with 2500+ employees

Answer 7

Yes! Your monthly balance includes interest that has accumulated. Check your statement. Unless you have an American Express Card (Green) where you pay the exact amount you spent in full every month.

Answer 8

If there is no annual fee to have the card. Some balances may include the finance charge for the month. Call the specific card company for details.

Answer 9

yes (not as much tho) but the stores that accept credit cards as a form of payment pay fees to the companies in order to be able to accept their cards in the stores, and use the machines to swipe and send data.

Answer 10

they still make money because the charge you interest on the balance as part of the total on your statement. they don't make as much off the people who pay right away, but they still make some.