How Credit Card Companies Make Money
Credit card companies make money in a variety of ways, including: Interest on outstanding balances: Credit card companies charge interest on balances that are carried over from month to month. This interest is typically the largest source of revenue for credit card companies. Annual fees: Some credit cards charge an annual fee, which can range from a few dollars to hundreds of dollars, depending on the card. Foreign transaction fees: Credit card companies often charge a fee when a card is used to make a purchase in a foreign currency. Late fees: If a credit card payment is not made on time, the cardholder may be charged a late fee. Balance transfer fees: When a cardholder transfers a balance from one card to another, the credit card company may charge a fee for this service. Cash advance fees: Credit card companies often charge a fee when a cardholder uses the card to get a cash advance. Interchange fees: When a credit card is used to make a purchase, the merchant is charged a fee by t...