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, which is 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 a debit card is not used for a long time and is not canceled, it can easily be used by criminals, leading to 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. At present, 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.

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 they are opened. , but the competition in the bank credit card market is also fierce now. Most banks have a policy of waiving the annual credit card fee for a certain number of credit card transactions (or a certain amount). This encourages 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 (about 0.5~0.7%) to the bank. This money is mainly shared by the card issuer, 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 0.55-0.99%.

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 is estimated to be several hundred million.

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< /p>

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 credit cards to make money.

Credit card What is the profit model?

1. Loans,

2. Banking insurance

3. Sales of wealth management fund products,

4. Financial equipment Sales,

5. Financial intelligent terminal business consumption profit,

6. Hedging business,

7. Bill business, etc.

The profit ratio of most banks in China is: 30% from loans, 10% from bank insurance, 10% from sales of financial fund products, 5% from sales of financial equipment, and 30% from consumption of financial intelligent terminal businesses %, hedging business 5%, bill business 10%, etc.;

The profit ratio of foreign banks is: loans 15%, banking insurance 15%, sales of wealth management fund products 15%, sales of financial equipment 10% %, financial intelligent terminal business consumption profit 35%, hedging business 5%, bill business 5%, etc.

Banks are the product of a commodity currency economy that has developed to a certain stage. Its emergence can be roughly divided into three stages:

1. The currency exchange industry and exchangers emerged.

2. With the addition of currency custody and payment services, the currency exchange industry has evolved into a currency operation industry.

3. Concurrently engaged in currency custody, collection and payment, settlement, lending and other businesses. At this time, the currency exchange industry developed into the banking industry.

Extended information

Article 2 The commercial bank referred to in this Law refers to a bank established in accordance with this Law and the Company Law of the People's Republic of China to accept deposits from the public and issue Corporate legal persons that handle loans, settlement and other businesses.

Article 3 Commercial banks may engage in some or all of the following businesses:

1. Taking deposits from the public;

2. Granting short-term, medium-term and long-term loans;

3. Handle domestic and foreign settlement;

4. Handle bill acceptance and discount;

5. Issuance of financial bonds;

6 , acting as an agent for issuance, redemption, and underwriting of government bonds;

7. Buying and selling government bonds and financial bonds;

8. Engaging in inter-bank lending;

9. Buying and selling , acting as an agent for buying and selling foreign exchange;

10. Engaging in bank card business;

11. Providing letter of credit services and guarantees;

12. Acting as an agent for payment collection and payment Insurance business;

13. Provision of safe deposit box services;

14. Other businesses approved by the banking regulatory authority of the State Council.

The business scope shall be stipulated in the commercial bank's articles of association and shall be submitted to the banking regulatory authority of the State Council for approval. Commercial banks may engage in foreign exchange settlement and sales business with the approval of the People's Bank of China.

Article 4 Commercial banks shall take safety, liquidity and efficiency as their operating principles, implement independent operations, bear their own risks, be responsible for their profits and losses, and exercise self-discipline.

Commercial banks conduct business in accordance with the law and are not subject to interference by any unit or individual. A commercial bank shall bear civil liability independently with all its legal person property.

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/baike .baidu.com/item/Law of the People’s Republic of China on Commercial Banks/4497407?fr=aladdin"target="_blank"title="Baidu Encyclopedia—Law of the People’s Republic of China on Commercial Banks"Baidu Encyclopedia— —Commercial Banking Law of the People's Republic of China

A big analysis of how credit card banks make profits and their sources of income!

Nowadays, many credit card customers are curious about a question, that is, how do banks make profits? Because many customers repay their loans on time, do not apply for installments, and basically do not charge any fees to the bank, then credit card How do banks make profits? Let’s take a look below.

How to make money 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 annual fees of thousands or even tens of thousands per card, and they cannot enjoy annual fee discounts.

2. Interest and handling fees: It is one of the biggest sources of money for banks. In the case of overdue credit cards, installments, minimum repayments, etc., banks will charge interest and handling fees. The rate is generally RMB 10,000. Five out of five.

3. Merchant commission: When customers swipe their cards to make purchases, merchants need to pay a certain proportion of the transaction amount to the bank, which is also the main component of credit card revenue.

How do banks make money from credit cards?

The main source of money for banks to make money from issuing credit cards is high interest rates. Once the user exceeds the interest-free repayment time, high interest will be charged, usually 0.05% per day.

The more common online platforms in China include: UnionPay Online, Kuaiqian, Shengpay, Alipay, Tenpay, etc. Depending on the platform and bank you choose, the charging standards and specific payment arrival time will be different.

This method mainly completes repayment through the "Lakala" smart payment terminal installed in convenience stores. It usually takes 2 to 3 working days to receive the payment. At the same time, repayment using this method is free of charge. A handling fee is charged.

Extended information

Improper storage of cards, improper handling (expired credit cards with invalid tapes are not destroyed, or lost cards are not immediately invalidated, etc.), and personal identity information is unintentionally stolen Or defraud. To avoid such problems, citizens should not easily provide personal identity information to others, and it is best not to entrust others to handle credit cards on their behalf.

The service staff overcharged the cardholder's credit card information during the purchase process, or stole his or her credit card information to make purchases at other merchants. This situation can happen whether it is a physical merchant or an online virtual merchant.

Baidu Encyclopedia-Credit Card

That’s it for the introduction of whether credit cards are profitable.