How do credit card companies make money?

Credit card companies make money by collecting fees and interest from their customers. Fees can be charged when customers make a late payment or go over their credit limit, while interest is charged when the customers use their cards to borrow money. Companies also make money by charging merchants a fee when customers use their cards to purchase goods or services. This fee is usually a percentage of the transaction, meaning that the more customers pay with their cards, the more money the credit card companies make. Additionally, credit card companies often offer rewards programs to encourage customers to use their cards more often, which helps to increase their profits. Finally, credit card companies make money through the annual fees they charge customers for the privilege of using their cards.

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