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Banks make money from credit cards by * charging a % from each transaction * late fees * interest on balances This assumes banks make less money on transact
by Justsignedup 12y ago
Banks make money from credit cards by
* charging a % from each transaction
* late fees
* interest on balances
This assumes banks make less money on transaction fees than they do on the other two when coupled with the potential for fraud... An interesting assumption...
- ssharp 12y agoIs this how it works? My assumption was that Mastercard, Visa, American Express, and Discover were the ones that made the % of each transaction and then the issuing banks were the ones that made the money from fees and interest.
- nthj 12y agoIt's my understanding banks also charge a transaction fee (may be flat per-transaction rather than a percentage.) (Source: I work for an online ticketing company, so we deal with these types of things.)
- dangrossman 12y agoMost of the fees end up back with the card-issuing banks. That's how they pay for the rewards programs, and why the fees are higher for rewards cards than other types.