If system says it charges no interest, it means that interest payments are hidden. Either behind transactions fees, or by fixed costs covering maintanance of cr

If system says it charges no interest, it means that interest payments are hidden. Either behind transactions fees, or by fixed costs covering maintanance of credit card, or by some other ways. In a sense you are right -- there is a hidden fee, and it's related to the value that credit cards create for merchants. There are other ways to make money on payments, besides interest. The card company charges the merchant a fee -- perhaps 3.5% -- to process the transaction. If a customers pays 8.00 USD for a toothbrush with cash, the merchant receives 8.00 USD in cash. If the customer pays with a credit card, the merchant receives 7.72 USD directly in their bank account. They lose 0.28 USD on 8.00 USD. Why do they take this deal? * Reduced risk of theft and loss. Cash is easy to steal -- it can be stolen by employees, by dedicated robbers, and by passers by. * Increased likelihood of making a sale. People don't want to carry too much cash, so sometimes they run out; and instead of making an impulse purchase, they just don't make the purchase. Credit makes it much easier for them to make that purchase.