Skip to main content

How Chase Bank Makes Money on their Credit Cards

 Fees and Interest and Merchant Charges.

Late Payment Fee, Over Limit Fee, Annual Fee, Cash Advance Fee, Very High Interest.

The banks will offer you credit when you have proven that you can make payments.  Basically that is what your credit rating tells them.

When you get a new credit card or loan it signals to the banks you are probably credit worthy.  

Credit Card Companies lose money on their reward programs.  However they make 80% of their revenue from fees and interest that the majority of their customers are willing to pay.  

The Average American has over $6,000 in credit card debt.  The average interest rate is between 20 and 24%.  This means the Average American pays over $100 per month in interest.

Many people spend over $1200 per year on credit card interest.

This is why the banks are so happy to offer you a credit card.

Merchant Charges

When you use a credit card the merchant will have to pay between 1.5% and 4%.  This means when you spend $100 the merchant will only get between $96 and $98.50.  These fees make the bank money also so if you do not carry a balance on the card the bank will still make money.   As long as you use your card the bank will be happy with you.



Banks in the 1980s

In the 1980s everyone paid for groceries, rent, and most expenses with checks or cash.  It was a misdemeanor to bounce a check.  However people bounced checks all the time.  As long as the bank customer came in and refilled their checking account the bank did not care.  They charged you a fee for every bounced check.  

I had a friend that worked at my local bank and he said the bank made enough money just from bounced check fees to pay their tellers.  It was a huge revenue source for banks.

Then the scammers got serious about writing checks and skipping town.  The merchants ended up with no ability to collect on these thieves.  This ended check writing in virtually all of the US.  Now Debit Cards have pretty much replaced Checks.


Comments

Post a Comment

Popular posts from this blog

New Account Notification

I have four different Free ways to be notified of a new account being opened in my name on my Social Security number.  This is the critical notification that your Identity is being stolen if you did not just open a new credit line. My Discover card, Credit Karma, Chase Bank, and Credit Sesame accounts all notify me if there has been a new account opened in my name with my Social Security number.   New Credit Account I recently opened a new Home Depot* credit card.  You know those Black Friday tool sales sucked me in again.  I do it almost every year.   Anyway right on time the next day and the day after I opened a new account I was notified by Credit Karma, Discover, Chase Bank, and Credit Sessame. Why This is Important Any time your credit is checked you need to be notified.  If you did not apply for new credit it is likely to mean someone is attempting to STEAL Your Identity.   The first step in Identity Theft is for the thief to apply...
Post a Comment
Read more

My Introduction to Airline Miles

 I was first introduced to airline miles by a friend who had just gotten a United Airline Chase Credit Card .   I signed up and started getting airline miles for all of my business purchases.  Just for signing up I received 50,000 miles.  I believe I had to spend $3,000 in the first three months to get the 50,000 points.  This was a great bonus, two free flights anywhere in the US for spending $3,000 which I would have spent anyway.   The annual fee for this card is $95 which is waived for the first year. It took 25,000 airline miles to get one round trip ticket anywhere in the US.  Short flights would only cost 20,000 airline miles. I used just this Chase United card for a couple of years and earned a couple hundred thousand Airline Miles on the purchases my business made.   More Chase Points Cards I applied for and got more Chase credit cards for points.  I got the first Chase Freedom card with no annual fee.  This ca...
Post a Comment
Read more

Bank Fees and How to Avoid Them

I hate to pay fees. Little fees, big fees, they all irritate me. In the old days of checking accounts where local companies all accepted checks, banks used to charge $15 to $25 on bounced checks. In my area of Montana they made enough in Bad Check fees to pay all of their full time tellers.  A friend who was a banker told me this. Fees are a huge revenue source for banks. I try to avoid most bank fees. My checking account is does not have a monthly fee. My savings account does not have a yearly fee.   I do have an annual fee on my lines of credit, HELOCs, but I have not been able to talk my banker out of those fees. Debit Cards Fees will grow quickly if you don't pay attention. Debit card fees can vary depending on the bank or financial institution you use, as well as the type of account and the transaction type. Here are some common fees associated with debit card usage: ATM withdrawal fees : When you use an ATM that is not owned by your bank or financial institutio...
Post a Comment
Read more