People who find themselves in a financial bind are likely to turn to the handy credit card for a loan. The credit card is the easiest way to get some cash to tide one over a short fall in their paycheck. It is also easy to buy something beyond one’s budget just by putting it on the card. With the economy affecting many people, some in depth knowledge about credit cards seems timely.
Someone penned an article on an experiment done to find whom were being targeted by credit card companies. This was done because they wanted to find out why some people get several offers every month while others not even one. This person created different personas from one whom paid the monthly payment on time and in full to the one that incurred late payments and maintained a balance.
As you may have guessed, the persona that paid on time and in full was not solicited by credit card issuers. Credit card issuers make their income from ones that maintained a balance and incurred late payments. There has been reports on people that only make the minimum payment, it takes several years to payoff the balance even with a modest balance.
The majority of the profits made by credit issuers comes from interest income, this accounts for about 39%. Next comes interchange income which accounts for about 25%. Interchange income is the charge that merchant pay for the privilege of accepting the card for payment at their store.