How do credit card companies make money?

Question

I charge like 100's of dollars a month but i only have to pay like $50.

Answer 1

read her other questions guys

Answer 2

If you charge 100's of dollars a month, you will eventually have to pay back all of it, not just $50. If you're only paying $50, then the unpaid balance is accumulating (and must be paid eventually), and you're being charged interest - large interest - on that balance.

You should always pay off the full amount every month. If you think you're getting something for nothing, you're going to be in for a big surprise soon!

They make money from two main sources: (1) interest on unpaid balances, and (2) fees charged to the retailer that accepts the card from you (usually 1.5 to 3.5%).

Trust me... they make LOTS of money!

Answer 3

Credit card companies make money in many ways. First, they charge the merchant that processes your card. That merchant pays for the privilege of being able to access your money through a third party. The credit card company may also charge you in a variety of ways:

Annual fees
Interest on your debt
Late fees
Cash advance fees
You will generally receive a monthly bill that allows you to pay of the balance or pay them any amount equaling at leas their minimum finance charge. The minimum finance charge generally covers slightly more than whatever the interest on the debt for that month would be. If you pay only the minimum amount, it will take many years to pay off your debt.

Answer 4

They make money from you!
Even you have to pay 50 each month it doesnt mean that you dont have to pay what you charge to your credit card. You are just paying a part and they will get more money at the end... because they charge you an interest.
Advice for you... if you do not want to make them rich.. pay the entire debt every month and just use your credit card for emergencies or to finance your expenses in a month... it´s just a simple way to keep your finances healthy

Answer 5

The make money off of the finance charges they tack on your bill monthly, if you don't pay the full amount owed. If you have $500 in credit card bills, and you pay the minimum of $ 10 every month, it would take you about 15-20 years to pay , and your interest would be somewhere between $2000 & $3000 for the $500 principal you owe[assuming you don't add anything else to the credit card bill].

Answer 6

R u kidding? Very high interest, for one. If you're late a time or two the interest goes even higher. They know many ppl will only pay the min. monthly payment, which doesn't bring the balance down much at all. If you owe 100's and only pay $50 a month, you'll be paying for along, long time. They make a killing!!

Answer 7

Credit card companies make money through the discount charges they charge merchants who accept credit cards (a percentage of each sale), interest charges when you carry a balance, late-payment fees, and sometimes annual fees.

Answer 8

its called interest . you are paying them money lots of money to have the borrowed money. each month you don't pay it off you pay more . look at your statement and you will see the daily monthly and yearly interest charges.
be care full credit cards are a terrible way of borrowing money as they charge a great deal more in interest then a bank loan.

Answer 9

If you calculate what you're paying over time as opposed to how much you've spent on your pruchases, you should see a rather large difference in those two numbers. The difference is what the credit card company makes.

Example:
You charge $450.00 on your credit card.
You pay $45.00 a month on it for one year to "pay it off".
$45.00 X 12 Months = $540.00
$540.00 - $450.00 = $90.00
$90.00 = Credit Card Company Profit

Answer 10

They make alot of money through finance charges, the less you pay on your balance every month to them, the longer you have to pay interest, and that's how they make billions of dollars.

And if you fail to pay anymore or file bankruptcy they charge it off and do tax deductions from their income, so they really don't lose anything.

Answer 11

good question.....i think they are a charitable bunch with your best interests at heart. They genuinely care for you, and don't encourage you to buy crap you cant afford so eventually they'll own your house from the interest you pay equivalent to the money you borrowed which in reality they don't have in the first place because someone elses interest paid for it. Quite a nice scam actually, well tuned and nowadays apparently normal and healthy.