Swipe it, charge it, whatever you do, you get instant payment in just a blink of the eye. Credit cards are one of those little things you will always wish you have to accomplish your everyday tasks. Most of the time, credit cards serves as back up payments when you do not really have the money you needed to purchase for a beer or something in a grocery store that very instance. You might actually think that credit card companies do not earn that much when you are paying your bill in time. Well, think again.
Credit card companies have different schemes when it comes to earning great revenue for their company. Like many merchandise out there, credit card companies earn a lot from those little bits of interest rates they charge you every time you pay late for the purchases you made. You are however given a grace period of 25 days to pay your bill before the credit card company starts adding interest to the amount you haven’t paid.
Most of the time, credit card companies sell their cards by partnerships with other merchants. You can be given discount offers for buying a certain product if you are to use that specific credit card, issued possibly by either Visa or MasterCard, which are the two most widely used credit card merchants.
Aside from late payment fees, your company can rob the money out of you by incurring other credit-related charges including fees exceeding your credit card limit and higher interest rates if you do not have a good credit score. A classic example if when your credit score is below 720, your credit card company might only give you a credit limit of at least $300 a month, and charge you 5% interest for purchases exceeding your card limit. Your credit score is mostly generated depending on how well you pay your balances on time.
Balance transfer is another way that your credit card earns money. Most companies will offer cardholders with low interest rates for moving an outstanding credit balance from another credit card company to their card. You will however need to pay for a balance transfer fee which will depend on how much balance you need to transfer.
You will need to request a withdrawal before this will take place. And as you have that cash in hand, a certain percentage will be added to your outstanding balance that you will need to pay for your next credit card bill.
Lastly, credit cardholders are always obliged to pay annual fees for the use of their cards. Besides, you will benefit from the card, and the company in turn need to generate income from its use.
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