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How do banks offer credit cards with 0.3% interchange? Do they charge an annual fee? If you have the standard 30 day bill cycle + 30 days to pay, thats is up
by adrr 2y ago
How do banks offer credit cards with 0.3% interchange? Do they charge an annual fee? If you have the standard 30 day bill cycle + 30 days to pay, thats is upwards of 60 days for an interest free loan to the customer.
- tiffanyh 2y agoThe same as other parts of the world. The biggest difference is no loyalty points. Someone needs to pay for those 50k airline miles if you sign up for a new card. And when interchange is that low, there’s no margin left for bank to offer (pay for) loyalty points.
- adrr 2y agoThere is a cost of the money and it isn’t 0.3% for two months. Banks have to get that money from somewhere and it costs money.
- codedokode 2y agoProbably they hope that credit card owner forgets to pay in time and will have to pay interest.
- ReaLNero 2y agoMonthly fees for the card
- PaulDavisThe1st 2y agoThat would be true if all credit card customers pay their monthly bills in full, every month. However, that is not the world we live in. Most people carry balances a majority of the time, with interest rates significantly above "the cost of money". Further, the banks (really: card issuers) (in the US, at least), are collecting 0.5-4% of all transactions as fees.
- naming_the_user 2y agoWe have the same caps, and in the UK we have cards with 12+ months interest free. They do sometimes have small annual fees but nothing like the bank rate. My understanding is that it's a bit like bank accounts, it's paid for by people who don't pay their entire bill and take the high APR, leave a large balance after the intro period, etc. Basically, if you do it right, you win, if you do it wrong, you lose and often big.