With the development of credit cards, major banks have launched credit cards targeting different groups of people, and they have been issuing various co-branded credit cards, and even some high-end credit cards. So what do banks rely on to issue so many credit cards? What about profitability?

How do credit card banks make profits

1 annual fee

Everyone who has applied for a credit card knows that a credit card charges an annual fee, which is usually Annual fees range from dozens to hundreds, or even 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 Cash withdrawal

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, which is usually the lowest. 10 yuan, up to several hundred yuan, thereby increasing bank income.

3 Interest

Credit cards allow for minimum repayments, and interest charges will be charged. Generally, five ten thousandths of the unpaid amount is charged every day, and interest is calculated on a daily basis. Compound interest is calculated monthly. 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 many ways for credit card banks to make money, including loss reporting fees, SMS fees, merchant fees, etc. Among them, credit card interest is the main source of income for credit card banks. Many credit card holders Since you do not have enough funds to repay in full, you need to apply for credit card installments or minimum repayments, which will require you to pay higher interest fees, thereby increasing bank income.