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........ at same time they give you cashback, travel, etc rewards too. What are the catch behind such lucrative offer and sustain business too?
The average credit card debt in the USA is north of $7,000. I keep getting these nice money back credit card offers and the interest rate is 28%-35%. Gee, no thanks. But I am not the average household that carries credit card debt. I suspect that people see the cash back, think it is a great idea, yet still can't figure out how to manage their credit cards. They spend because they are "making money" when they spend. You'd better believe that those credit companies are making money at 30% interest.
For those who don't carry a balance, the fee to the seller covers the cash back to the buyer. No profit in it, but it breaks even, so there is no loss.
Veering slightly off topic, those high interest rates used to be in violation of usury laws. Apparently, not any more.
The average credit card debt in the USA is north of $7,000. I keep getting these nice money back credit card offers and the interest rate is 28%-35%. Gee, no thanks. But I am not the average household that carries credit card debt. I suspect that people see the cash back, think it is a great idea, yet still can't figure out how to manage their credit cards. They spend because they are "making money" when they spend. You'd better believe that those credit companies are making money at 30% interest.
For those who don't carry a balance, the fee to the seller covers the cash back to the buyer. No profit in it, but it breaks even, so there is no loss.
Veering slightly off topic, those high interest rates used to be in violation of usury laws. Apparently, not any more.
That's playing fast & loose with "average". The average credit card debt for households carrying credit card debt is about $15,000. There are a relatively small fraction of people with huge credit card debt who skew the average. Only 34% of people with credit cards carry debt month to month. That's down from 44% in 2009 at the peak of the Great Recession unemployment spike.
Actually that's all you can call them. You don't go on vacations, you don't go buying stuff using cc when you're financially on the rocks. But most need to hide the fact they are in financial hell so they keep hurting themselves by borrowing more. All because of some ego r gotta keep looking successful. If people just stopped believing in this gotta keep some appearance of wealth when you truthfully are eating top ramen to afford that 60k whatever on wheels or have a fancy zip code THEY would be better off.
Years and years ago we had a rough patch financially. I won't lie it sucked. I think around 97-98 I couldn't get a lot of work, my wife was working for less money and we could do two things. We could give everyone the appearance we were doing fine go to dinners buy stuff live like nothing was wrong and live off credit cards or we could tighten the belt and tread carefully. Guess which we did. I realized back then how little I really cared what someone thought about what I drive wear or live. I have never felt the need to play keep up with the Jones game.
Yep. I was unemployed for 14 1/2 months back in 2008-2009. At the time, I had zero debt. I dialed my spending back dramatically and lived off an unemployment check. I came up maybe $5K short but I had a substantial amount of cash reserves and spent the interest income from that. With today's crap interest rates, that wouldn't be possible but it was certainly possible in normal interest rate times.
And yeah, the 34% of people who have credit cards and carry debt month to month really are morons. If you're playing games with 0% introductory rate balance transfers, fine. If you're paying 18% interest on that money, you should be taken out to the woodshed and beaten to your senses.
It is universal fact that no company operate in loss otherwise they will not exist in business. So how the credit cards companies make money to sustain themselves at same time they give you cashback, travel, etc rewards too. What are the catch behind such lucrative offer and sustain business too?
1) They make money on merchant fees every time you make a credit card purchase, e.g. you spend $100, the CCC makes say $3 and pays you back $1, net $2 for CCC. (Beats cash or debit, you get back squat.)
2) MOST CC users do not pay in full every month and therefore carry a balance. CCC makes money every time their customers pay interest on their purchases.
3) Some CC users incur fees for late payment, going over their credit limit, etc - CCC makes money every time customers pay these fees.
It is universal fact that no company operate in loss otherwise they will not exist in business. So how the credit cards companies make money to sustain themselves at same time they give you cashback, travel, etc rewards too. What are the catch behind such lucrative offer and sustain business too?
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