How do credit card companies make money?

Credit card companies make money by charging interest on balances, setting up fees for services or certain transactions, and by charging annual fees. Interest is the primary way for credit card companies to make money. When a customer takes out a credit card, the credit card company will lend them money and charge them interest for using that money. The interest rate is usually based on the customer’s credit score and other factors, and can range between 10 to 20% per year. Fees are another way that credit card companies make money. Most credit cards companies charge annual fees for certain services or transactions. These fees are often used to cover the cost of things such as balance transfers, travel rewards, and cash advances. Many credit cards companies also charge fees for late or missed payments, over limit charges, and foreign transaction fees. Finally, credit card companies make money by charging annual fees. Annual fees are charged in order to cover the cost of maintaining the account. These fees are usually a percentage of the cardholder’s total credit limit. In Delaware, the maximum annual fee for credit cards is $50. By charging interest, setting up fees, and charging annual fees, credit card companies can make money. It is important for customers to be aware of the rates and fees that they are being charged in order to be sure to get the best deal.

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How do credit card companies make money?

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