In a world where credit card usage is swiftly becoming the norm, companies are vying for customer attention by offering a plethora of enticing deals and rewards. But have you ever pondered how these companies manage to profit while doling out so many offers? Today, we delve into the mechanisms behind the profitability of credit card companies.
Airport Lounge Access: A Premium Perk
Some credit cards offer complimentary access to airport lounges and even railway station lounges. While customers may occasionally have to pay a nominal fee for this access, it’s often provided free of charge. However, the question arises: how do credit card companies sustain themselves amidst such generous offers?
Earning from Interest and Penalties
It’s a known fact that many credit card users fail to pay their bills on time, incurring interest and penalty charges. Moreover, companies also collect charges for shopping on EMIs. These penalties and charges significantly contribute to the profits of credit card companies.
Assorted Fees
Several credit card companies impose annual and renewal fees on their customers. Although most companies waive these fees upon reaching a predetermined spending limit annually, they still generate revenue through balance transfer fees, late payment fees, cash advance fees, foreign transaction fees, and various other charges. Consequently, these fees constitute a significant portion of the companies’ earnings, as they consistently levy charges on their users.
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