A big analysis of how credit card banks earn money!

Nowadays, many credit card customers are curious about how banks can make profits, because many customers repay their loans on time, and they have not applied for installment, and they have hardly charged the banks any fees. So how can credit card banks make profits? Let's take a look at it below.

how to make a profit with a credit card

1. charge an annual fee: the most basic thing is to charge an annual fee. the higher the credit card level, the more expensive the annual fee. For example, high-end cards such as platinum cards and above have an annual fee of thousands or even tens of thousands per card, and you can't enjoy the annual fee discount.

2. Interest and handling fee: it is one of the biggest sources of money for banks. In the case of overdue credit card, installment and minimum repayment, banks will charge interest and handling fee, and the rate is generally five ten thousandths.

3. Merchant's commission: When customers spend money by credit card, merchants need to pay a certain percentage of the transaction amount to the bank, which is also the main component of credit card income.

What is the profit model of credit cards, and how do they make money?

The profit model of credit cards:

1. Interest income is the interest paid by cardholders on the outstanding credit card balance;

2. Information exchange income refers to the fees paid by the acquiring bank to the issuing bank, accounting for a certain percentage of the transaction amount of the special merchant;

3. The cardholder's annual fee refers to the fee paid by the cardholder to the issuing bank for obtaining the right to use the credit card;

4. Other fees and income include fees and income generated from other credit card services;

5. The fee charged by the special merchant to the special merchant because the special merchant provides transaction processing and bears the credit risk;

6. The deposit interest income is the deposit interest income obtained from the deposit account of the special merchant;

7. Other income is the income from renting POS and card pressing machines.

Extended information:

Advantages of credit card:

1. You can overdraw consumption without deposit, and you can enjoy an interest-free period of 2-56 days, and you can repay the interest on time without any charge (most banks will charge .5% interest on the day of cash withdrawal, and there is also a 2% handling fee, and ICBC will only charge interest).

2. swiping your card when shopping is not only safe and convenient, but also a bonus gift.

3. special merchants who hold cards in banks can enjoy discounts.

4. Accumulate personal credit and add a credit record to your credit file, which will benefit you for life.