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

they don’t* – but people who actually do this every month are an extremely small slice of their overall customer base.

* they technically collect transaction fees on every purchase, so they don make a small amount on even customer who don’t carry a balance, but that’s negligible compared to fees and interest they charge on those who do