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

Those people are known as “freeloaders” in the card industry. The card user gets all the good stuff basically for free. It’s the smart way to use your card. The people who only pay minimum payments pay so much interest and there are so few freeloaders that it all balances out for the card company, they still make tons.