How credit cards with 0% introductory APR make profit??

Question

How credit cards with 0% introductory APR make profit??

Answer 1

They make it when the into rate expires, and keep in mind....the vendor that takes your card pays anywhere from 1% to 4% fee to accept the credit card. So dont worry about the CC making money!!! They make a ton!!

Answer 2

They think long term.....

1. They make profit after the introductory period is over and you still have balance.

2. There is a possibility that somebody will default in introductory period then the rate goes to 24% plus late fees.

Answer 3

They don't expect you to pay it off before the introductory period ends.  Then the rate is normally very high after that to make up for it.

Answer 4

They make it when the introductory period runs out and you (or at least most people) continue to carry a balance.

Answer 5

As for a credit card: 1. the trail period after 3-6 months  % rate can shoot up to 13.9%.  Of course credit card companies, know people will be late on some credit card, or utility and with out notice most credit cards will raise your % rate to 21.9%.   They are hoping you don't notice for a few months, by then they have already made some good money, even if you cancel you card, it was worth it.  Of course that is where the big money comes from, but there still is the merchants.  When you buy something on credit the store only gets 97%.  That means for every dollar you spend the credit card gets 3 cents.  With billions of dollars spent every year, they will make money.