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

Former employee in your wallet.

Late payers, overdrafters, and folks who do not pay in full each month are the most lucrative, but even folks who pay in full each month add to the bottom line via service fees charged to the vendor. I always ask local businesses if they would prefer a check or cash over a debit/credit card because the fees cut into the local business’ bottom line.