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

Stores pay CC companies (on average) 30cents plus 1-3% simply to process the transaction. Thus all the “Minimum purchase” at smaller shops to use card

Plus, you’re drastically over estimating the number of people that pay off balances before interest kicks in. They’re stingy to a fault, if they weren’t making money they’d stop doing it