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How Credit Card Companies Make Money

Credit card companies make money in a variety of different ways. Each time that you use your card, you are helping the company that issued the card make a profit that is then used to offer more services to customers, pay workers and make the card issuer a stronger company.

Credit Card Companies Make Money From Credit Card Processing Fees

Credit card processing fees are one way that a credit card company can earn more for itself. Each time a card is swiped, the merchant is charged a fee that goes directly to the credit card company. This fee is either a flat fee or a percentage of each transaction. In some cases, a merchant is charged a percentage of each sale plus a flat fee per transaction.

Credit Cards Charge Interest for Outstanding Balances Each Month

Credit card companies are going to charge interest on any customer balance that is outstanding at the end of the month. Most credit cards carry a sliding scale of interest charges depending on a borrower’s credit score and credit history. Customers can expect to be charged anywhere from 0 percent per month for those with the best credit to as much as 30 percent for those with poor credit.

Miscellaneous Fees May Also Be Charged

A credit card company may charge late fees if a customer does not make a credit card payment on time. There may also be fees charged if a payment is accepted at a payment terminal but cannot be processed due to insufficient funds. Fees for cash advances may also exist depending on which card is being used.

How to Accept Credit Cards

Businesses that want to accept credit cards use merchant accounts to have those payments processed. Merchant accounts are relatively easy to obtain as long as your company has decent credit and a track record of making steady profits.

Credit card companies have many ways that they can make money. By charging interest, late fees on payments and by charging fees to merchants using their cards, credit card companies have many different avenues through which they can make earn a profit.


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