How Credit Cards Make Money

Credit Card Companies make billions of dollars every year. We all know this and except this reality when we choose to use plastic. 

But just how is all this money made? 

You maybe surprised to find out that a credit card company makes money in four ways. (Make sure to check the diagram below for a complete illustration)

Fee's - Annual fees, late fees, over limit fees. You get the idea. Make a mistake you pay a fee.
Interest on the loan - The power of compounding interest is used against you. If you pay it off great, but most of us do not and it costs you. (Check out this credit card calculator from the Financial Agency of Canada to see the real interest costs of a credit card balance.)
Card Issuer Fees to the Retailer - Every time you use your credit card the the retailer pays a percentage to the credit card company.
Credit Card Company Sells your Name - That's right your name is sold to marketing companies to sell you more stuff (hopefully using a credit card).
    Credit Money
    Via: Credit Score

    Something to think about when you reach it your wallet!

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    Financial Blog of Mike Hassard | Life Insurance Debt Investing Mutual Funds |

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