How do credit card banks make profits

1. Annual fee. Anyone who has applied for a credit card knows that credit cards charge annual fees. The annual fees usually range from tens to hundreds. There are even annual fees in the thousands. However, many banks have discounts for some card types that can waive annual fees for the next year if the number of card swipes reaches a certain limit. However, many high-end credit cards cannot waive annual fees and require cardholders to pay.

2. Withdraw cash. Credit cards all have cash advance and cash withdrawal functions. You can directly withdraw cash from the credit card limit, but you need to pay a certain handling fee for cash withdrawal. Generally, the minimum is 10 yuan and the maximum is a few dollars. Hundreds of dollars, thereby increasing bank income.

3. Interest, a credit card can have a minimum repayment, and interest will be charged. Generally, it is 0.05% of the unpaid amount every day. Interest is calculated on a daily basis and compound interest is calculated on a monthly basis. . If the cardholder makes minimum repayments for a long time, or repays in installments, he or she will need to pay a large amount of interest charges.

There are no "disadvantages" in the invention of credit cards. It's just that some people who use them "don't know how to use them" cause the "disadvantages" of credit cards. Just like a knife, "good people" use it to chop firewood, and "bad people" use it to chop firewood. "But it's used to kill people.

1. Blind consumption

Swiping a card is not like spending money one by one like paying with cash. Once you swipe it, you feel nothing, just a few numbers, which leads to blind consumption and spending money like this. Running water. However, can you be irrational about what you should buy and what you should not buy?!

2. Excessive consumption

Laptop installment, digital camera installment, smartphone installment, in advance While enjoying your favorite items, you also have to consider whether your salary will be just a drop in the bucket when you repay the loan next month?

3. High interest rates

If you don’t know how to pay If you apply for a credit card, you will not be able to repay as scheduled when the final payment date comes. The bank charges a certain interest fee to avoid greater risks. You can only blame yourself.

4. Annual fees are required

Credit cards basically have annual fees, but they basically have annual fee-waiving policies. For example, China Construction Bank only needs to pay three times a year to waive the annual fee. ; On the contrary, the debit card has received small fund management fees since 2006, and it will cost ten or twenty yuan a year. If you apply for a credit card and you can't do it or don't know how to use it three or five times a year, then the bank should charge you an annual fee.

How do banks make money through credit cards?

Credit cards are a major type of card promoted by banks. Nowadays, a variety of credit card types are flooding the eyes of consumers, and our lives seem to be surrounded by countless credit cards. Why do banks require so many credit cards every year? How do banks make money by issuing credit cards?

Income composition of credit card business:

1. Card issuance business, income includes: first-year annual fee, card production fee (reissue card), fast card issuance fee, and other card issuance income

2. Revolving credit business, income includes: consumption revolving interest, cash advance revolving interest, late payment fees

3. General consumption business, income includes: card issuing bank commission, cash advance procedures Fees

4. Account management services, income includes: annual fee for the following year, loss report fee, card replacement fee, etc.

5. Value-added business, income includes: merchant commission, cardholder procedures Fees

So, in general terms, the profit points of banks through credit cards can be summarized as:

1. Interest income. If you fail to repay the loan overdue, you will have to pay interest at an expected annualized interest rate of 5%, which is equivalent to one year. This expected annual interest rate is very high. However, it is estimated that as people become more and more aware of credit cards, it will become more and more difficult to collect this kind of interest.

2. Consumption fee income. After the cardholder makes a purchase in the mall, the bank charges commission income from the mall. Don’t underestimate the current ratio. This is the handling fee charged for each transaction, which is very considerable. In addition, handling fees are charged for credit card cash withdrawals, loss reports, emergency rescue and other services, which are also income.

3. Annual fee income. This annual fee is basically uncollectable now and will never be collected in the future.

Fee income, interest income, and annual fee income, the most basic and direct three of them come from the income of the credit card itself. Annual fee income is now collected even by ordinary debit cards

There is also indirect income: income from the use of funds. The money you deposit in the card is used by the bank for investments such as loans or buying treasury bonds. Through investment, the bank earns the difference between the loan interest and the deposit interest as its own Income, this is also the reason why many banks blindly issue cards regardless of costs or the number of valid cards.

Fee income and fund utilization income are the main channels for making money with credit cards.

I want to ask How to use credit cards to make money

The methods of using credit cards to make money are as follows:

1. Participate in credit card bank activities, such as discounts at designated merchants, and Activities such as coupon rebates and gifts for accumulated consumption.

2. Credit cards have a certain interest-free period. If you make a purchase one day after the bill date, you can enjoy up to 50 days of interest-free. You can make good use of this time to manage your finances and gain profits.

3. Use credit card points to redeem points. Credit cards generally have points after payment. Points can be exchanged for some airline miles, coupons, some platform memberships, commodities, etc.