What are the main economic drivers of a credit card business?
Question:
Answer:
The high interest rate they charge
The interest rate and additional charges are what make the credit cards so benificial to banks.
It is said that 70% of people with credit cards do not pay their full amount at the due time. So 70% of the credit card holders for a certain bank will have to pay interest and probably additional charges for late payments.
This is very profitable for the bank taking into consideration that the smallest credit card databse is about 50-60 thousand cards.
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