How do banks make money through credit cards?

The four major profit methods of banks:

1. Commission

You may not believe it, but the commission collected by banks from merchants is the largest and most stable means of profit.

When customers make purchases at merchants and swipe their cards through POS machines, the bank will receive a commission of about 1-3 on the transaction amount. This amount is not small anymore, and many small merchants often refuse to let customers use POS machines in order to avoid paying this fee.

2. Annual fee

Nowadays, most of our domestic credit card annual fees are within 300 yuan, and they can be reduced as long as the conditions are met. But there are also some high-end credit cards with annual fees as high as 3,600 yuan or more because they provide special high-end services, and the conditions for their annual fee exemption are also very strict. However, for the wealthy, the services provided by these credit cards far exceed the annual fee of several thousand yuan, so they will not be stingy about paying.

3. Handling fee

This handling fee is mainly for cash withdrawals. The bank's handling fee for domestic credit card cash withdrawals in China is 0.5 of the cash withdrawal amount, with a minimum of 2 yuan and a maximum of 50 yuan; overseas (including Hong Kong, Macao and Taiwan), the handling fee is calculated based on 3 of the cash advance amount, and the minimum charge is Pen is ￥30 yuan or $3 USD.

If you deposit your own money into a credit card and then withdraw cash, you will also have to pay this fee. If there is no balance in your credit card and you withdraw cash overdraft, in addition to paying the handling fee, you will also need to pay 0.05/day interest.

4. Interest

Because credit cards have entered the homes of ordinary people today, the repayment ability of ordinary customers is not as good as that of the rich, so it is inevitable that the credit card cannot be paid off in full on the repayment date. Condition. In response to this phenomenon, banks have set minimum repayment amounts, and have set interest and late fees for non-repayment. While giving customers a sufficient breathing period, they have also increased their own revenue.

After careful calculation, you will find that the unique "compounding interest" model of credit cards makes their interest rates no less than. However, last year, the country abolished late payment fees on credit cards and replaced them with liquidated damages, which alleviated this to a certain extent. There is pressure from repayers, but even so, the interest on credit cards is still very staggering.

What are some ways to make money with credit cards?

Credit card application, card swiping machine, card swiping software, repayment, limit increase, large amount processing, points swiping, gift swiping, and financial management. Peanut Tree Credit Card, search the website to browse credit card related knowledge. When handling credit card machines and credit card software, please note that some brands must not be used. There are also many pitfalls in using software to return cards. Analysis of each risk and brand. Don’t apply for credit cards frequently. Apply for a credit report once. The website can simulate the application and provide improvement methods. If you have a limit, go to the bank website to apply. There are many strategic ways to make money with your credit card. There are two ways to directly withdraw cash. One is self-service cash withdrawal by customer service. Call the credit card customer service hotline of the card issuer and follow the voice prompts to perform self-service cash withdrawal. The amount of cash withdrawal will be directly transferred to the debit card provided by the applicant. One is to use WeChat to withdraw cash, follow the card issuer's WeChat official account, and complete the withdrawal operation in the bank service account. WeChat withdrawal will also transfer the cash withdrawal amount to the registered debit card. Some banks are offering loan products through credit cards, which are based on the interest rate of the loan. Different terms have different interest rate standards. For loans with relatively low terms, such as 3-, 6-, and 9-term loans, the annual interest rate may be lower than the credit card overdraft interest rate.

With the development of mobile Internet, Internet payment has accelerated, and some emerging repayment methods have been added, including WeChat transfer repayment, Alipay transfer management, Lakala repayment and other new repayment methods.

In terms of credit limit, the credit card limit is related to many aspects such as personal income, academic level and technical title, marital status, company strength, home address, working years, and age. The approval of the credit limit is affected by many factors. Each section has a score standard. The higher the overall score, the higher the amount you can buy.

How to make money with credit cards

Sources of bank credit card income:

Annual fee income: We all know that bank credit cards will charge annual fees as long as the card is opened, but now the competition in the bank credit card market is relatively fierce. Most banks waive the annual fee for credit cards after a certain number of card transactions (or amount) The policy is to encourage the use of credit card consumption, and the bank can charge other large profits!

Credit card processing fees and merchant rebates: Every time we make a purchase with a credit card, we need to pay a certain amount of processing fees, but most of this part of the money is borne by the merchants. But this is only a small part, and the card rebate is the real “treasure pot”. When we swipe a card at a merchant to make a purchase, the merchant has to pay a certain proportion of the transaction amount (around 0.5 to 0.7) to the bank. This money is mainly shared by the card issuing bank, UnionPay and the acquiring bank. Among them, the credit card issuing bank will charge between 0.36 and 0.48, and the specific banks are different

Instalment fees: Installment fees are now also a key business promoted by banks, because this makes money really fast, and Very fat. Currently, banks with credit card business will basically provide installment business, with installments ranging from 2 to 36 months, and the handling fee for each installment ranging from 0.55 to 0.99.

Liquidated damages: If you fail to repay the bill after it is due and do not repay it for a long time, in addition to overdraft interest, you will also face liquidated damages and penalty interest. Although this is not the main income of the bank, it is For a big bank, it would probably be several hundred million.

How do banks make money by issuing credit cards?

1. Card swiping fees. Card swiping fees are also called "card swiping commissions" and are currently the most important source of profit for domestic banks' credit card business. When a cardholder completes a transaction by swiping a credit card at a merchant, the merchant has to pay a cost, the so-called card swiping fee.

2. Interest income. Interest income, which we often call "penalty interest income", is also an important source of profit for banks in the credit card business. When the cardholder fails to repay the loan on time, it will be recorded as overdue, and the bank will charge interest

The hidden dangers caused by idle savings cards are first of all the fee deduction issue. Some bank savings cards require annual fees or There is a small management fee. If there is still change in the debit card, the bank will keep deducting the fee until the amount is overdue. Secondly, a lot of personal information is registered when opening a bank card account, such as name, address, mobile phone number, ID number, etc. If the debit card is not used for a long time and is not canceled, it can easily be used by criminals, resulting in the theft of personal information.

The hidden dangers caused by idle credit cards. Credit cards are different from debit cards. They are closely related to the cardholder's personal credit report and require special attention. Most credit cards charge an annual fee, and some credit cards even charge an annual fee even if they are not activated. Therefore, credit cards that are idle for a long time can easily cause annual fee arrears, which will affect personal credit.

After receiving a customer's request to cancel a credit card, the bank will usually process it within a certain period of time. During this process, the bank will check whether there is any debt on the credit card and whether the customer's debt has been settled, etc. Generally, this cycle of banks is about 45 days. The bank will handle the card cancellation procedure for the cardholder only after confirming that the cardholder does not owe money.

For the sake of safety when canceling a credit card, it is best for customers to call the bank’s customer service number about 40 days after canceling the card to confirm whether their account has been successfully canceled to avoid future troubles.

Account cancellation standards of major banks

1. Industrial and Commercial Bank of China: If the customer’s account does not have online banking, withholding and collection services, and the average daily balance is less than 300 yuan, the account will be closed. The bank will automatically deduct a management fee of 3 yuan per quarter and an annual fee of 10 yuan. If the balance is deducted, arrears will occur. If the balance is arrears for one and a half years, the bank will automatically cancel the account.

2. China Construction Bank: Accounts that have not been used for more than 3 years and have a zero balance cannot be used normally. If customers want to use them, they need to activate them at the account opening outlet. Currently, we have not received any notification from the head office that the account will be automatically closed. If necessary, customers can go to the branch to cancel the account by themselves.

3. Agricultural Bank of China: If the customer's account balance is zero and has not been used for one and a half years, the bank will automatically convert the card to a "sleep account" and can no longer be used. If it is not used for 5 years, the bank will automatically close the account.

It is free to apply for a credit card, and there is no interest for repayment on time. So how do banks make money?

How do banks make money? In principle, they deposit low-interest deposits at high prices and lend money to earn the spread. It seems that the profit from the simple spread is not very high, but do you know how many times a bank can lend a certain amount of money to form a compound interest model to make money?

If a bank deposits a sum of money, it only needs to ensure that 20% will not be lent, and the remaining 80% can be lent out. Aren't you afraid that savers will be unable to withdraw the money? Don’t worry about this. For example, Party A deposits money into the bank, and Party B needs a loan to pay workers’ wages or pay for materials, but Party C, who has received the money, deposits the money into the bank again. No matter how much troubles are made in the middle, the money will eventually come back. When you go to the bank, the bank can continue to lend, so your deposit is not loaned to one person, nor is it only loaned once to earn the difference.

The deposit reserves mentioned here refer to the deposits in the central bank prepared by financial institutions to ensure the needs of customers to withdraw deposits and liquidate funds. The proportion of deposit reserves required by the central bank to its total deposits is deposit reserve ratio.

By adjusting the deposit reserve ratio, the central bank can affect the credit expansion capabilities of financial institutions, thereby indirectly regulating the money supply. With the guarantee of deposit reserves, it is equivalent to paying a deposit. According to the adjustment of market currency volume, the deposit reserve ratio increases, market funds tighten and investment declines. On the contrary, liquidity is released, promoting employment and investment, etc.

So why should we reduce bank liabilities?

We know that in the past two years, both LAR and MLF have been reduced for many rounds, which has reduced the interest space of banks, increased the pressure on mortgage loans of banks, and begun to complain. In addition to connecting assets and liabilities in the financial system, banks also play a role in risk identification and pricing.

Think about the various real estate policies introduced earlier, which are inseparable from the country’s general direction of “guaranteing the delivery of buildings”. After all, who is the industry with the highest debt? Against this background, finance and real estate can remain strong in today's stock market, while growth stocks have no support.

In fact, banks are such an industry. You can't live without them and you need them, but be wary of them selling you umbrellas on sunny days. After all, the umbrellas may be recycled when rainy days come.

That’s it for the introduction of how to make money with credit cards.