How do banks make money through Credit Cards?



If we make a payment of 100 bucks to a merchant through credit card, we pay 100 bucks to the bank.
Then how does the bank make money on this transaction?*

*Provided we make the full payment to the bank on the due date.

How do banks make money through Credit Cards?
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6 Replies to “How do banks make money through Credit Cards?”

  1. 1) YOU may make full payment each month but most people do not and the banks then charge interest for ever more.
    2) The merchant also pays a small fee to the bank on each transaction. So the merchant is not receiving the full 100 but goes along with it because it is more convenient for the merchant for customers to pay with plastic than to wait for them to come back to the shop with actual cash.


  2. Other fees are charge.
    Annual fees etc. and even small fees during transactions
    plus the interest when people forget to pay on time
    So stay away from credit cards.


  3. When you make a payment of $ 100 at a merchant via credit card, the merchant doesn’t get the whole $ 100. They would get around $ 98 and the $ 2 fee goes to the credit card company (actual numbers vary depending on the type of business). Plus the bank may make interest off your transaction depending on your account agreement.


  4. If you are making full payment, then bank earning comes from merchant only, merchant share some % with bank.

    In other cases, bank charges interest rate of 30 or more, on cash withdrawal interest rates are >40%, in addition to this, banks charges late fee, annual fee and many more.

    Using CC is an addiction, in starting you remain in limit and further you become part of customers who helps in earning of bank. Its a fact.


  5. They can charge the annually fee, charge a tax on the credit card when you credit you amount and they also charge the penalty free.
    The banks can make money from different rate of interests..






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