eli5 How do credit card companies make money out of people that pay their cards in full before the billing cycle and still get rewards?

Question

eli5 How do credit card companies make money out of people that pay their cards in full before the billing cycle and still get rewards?

In: 808

Answer 1

Its because the money that they make from the financially irresponsible people (interest from not paying the statements in full) offsets all of the costs (rewards/miles,etc) from the financially responsible people.

Also they get a very small % of all transactions in which that card is used.