Affirm (and other installment type companies) offer a different benefit, I guess? No rewards, but you don't have to have all money on hand. I love this for my iPhone, but these installments could easily stack up.
Visa/Mastercard/AmEx and others don't care whether you are paying off your bill or not. The take a cut of every transaction done on their networks.
Banks that issue the cards do profit from interest, but that is somewhat balanced by some people just never paying. They also collect various kinds of fees, whether directly for the card or other parts of their business (e.g. they attract customers with good cash back cards then sell them on mortgages or auto loans).
Ultimately everyone is paying for credit cards simply from the price of goods they buy going up to account for the costs.
Exactly this. I'm getting 3-5% cash back because some folks don't pay off their card every month. The rich get richer.
EDIT: point was, it's really nothing to do with whether other people are carrying balances or not.
0: https://paymentdepot.com/blog/average-credit-card-processing...
Not sure how legitimate my source is but it looks like they raked in ~$75bn in 2020 from interest income alone. That makes me wonder if those of us that do use a CC as a debit card are a minority.
Source: https://www.fool.com/the-ascent/research/credit-card-company...
ALso don't forget, credit card companies charge at least 1.5% of a fee to the retailer, this is why some places (usually gas stations) will have a cash price and a card price...
But yeah... lots of the perks are paid for by the rest of people who aren't paying off the balance...
1. Interchange fees. You are probably paying 1 to 3 percent baked into the costs of what you are buying to pay for the privilege of using a credit card as method of payment.
2. If you don't pay off every month, you are paying pretty hefty interest on any of your balance that carries over from month to month.
https://bam.kalzumeus.com/archive/how-credit-cards-make-mone... is worth a read.
Wrong on the second point. The issuing banks (Capital One, Chase, etc..) are the ones that collect the revenue from the interest/late fees on credit card debt.
The credit card companies (Visa, MC, etc..) only make money from the transaction and settlement phases.
Your purchase data is worth more than gold. Merchants also pay a fee on every credit card purchase.