How does my credit card company benefit if I get rewards but never carry enough of a balance to owe interest payments?
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Credit card companies make their money 2 ways, either be charging ridiculous interest rates on balances, or by charging transaction fees.
Every time you buy something on a card the merchant pays a fee to the credit card company. So even when you don’t hold a balance they make money.
So giving people rewards encourages you to use the card more frequently, so the bank in turn charges more transaction fees.
Meanwhile the interest rates on cards are so high that if you miss even 1 months payment then you’ll pay more than the rewards are worth. And there’s a lot of people out there with Credit Card debt…
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