How Credit Card companies make huge Profts & why they do offer incentives ?

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Credit Cards have become increasingly useful in today’s lifestyle. People choose to rely more on Virtual cash in shape of Credit Cards than, carrying Cash. However, many of you may wonder that how & why credit card companies (banks) offer glowing offers and incentives to their customers.

What exactly is the revenue source of CC companies, and how exactly do they net their customers in their schemes. Why Credit Card companies make calls and request new customers to choose their cards over the other.

Here are ways that Credit Card companies make profit ; their revenue sources:

1. Credit Card companies charge a yearly Fee of like $20/year to as much as $40/year (Visa/Mastercard). The more clients the more fees they get annually.

2. A Fee is charged upon (cash withdrawal) from ATM.

3. 2.5% is charged upon every purchase you make using your Credit Card. Lets suppose you buy a Mobile Phone, and you will be charged 2.5% extra when paying via VISA Credit Card.

4. In case someone is unable to pay the Credit Card bill, gets charged with interest.

5. A credit card company makes true profit, when the Customer choose to pay bills in installments or after due date. The more the delay is, the higher the interest revenue they earn.


So, this is why a lot of people today get glittering offers from Credit Card companies with compensations & Rewards. In short, actually they are earning rewards & making cash for themselves.