How Credit Card Companies Make More Money.Customers Targeting By credit Card Companies.Which people companies seek out the most

All Info. How Credit Card Companies Make More Money. Kind Of Customers Targeting By credit Card Companies.Which people company seek out the most.

Types Of Credit Card Companies?

Well, there are two types of credit card companies. 

On one hand you have the issuers

The banks who essentially hand out the cards. You also have the networks, who process these transactions, such as Visa or MasterCard. 

American Express and some others act as both issuers and networks. One way these companies make money is by charging the retailer in the form of a transaction fee. 

This number is usually between 1% and 3%. Suppose at a given store, this number is 3%, that means if someone buys $100 worth of items using a credit card, the store keeps $97 and $3 is paid to the issuer and network. 

These few dollars may not seem like much, but over time they add up. But why would a store do this? Why would they give up precious revenue? Two reasons.

Why Stores Do This Losses By Using Credit card.

Costumer Convenience

Customer convenience. Stores are in competition with one another and need to make their experience as easy  and hassle-free as possible, or else customers will shop somewhere else. 

Number Second: Impulse shopping. 

When not paying in cash, people tend to spend more since the money spent does not feel reals. This of course is good for the store.

More spending = more revenue. This is especially true if the money doesn’t even need to be paid back right away. 

How Credit Card Companies Make Money?

Commonly Credit Card Companies Make Money By two Ways:

Number 1:Interest

Number 2: Charging From Retailer

Credit Card Companies make money By Interests

This brings us to the other way these companies make money: interest. 

This is additional money paid when the balance owed is not paid at the end of the month. 

Second Is Fees

The other way they make money is through fees. Fees for having the card. Fees for cash advances. Fees for paying late. 

What kinds of customers are they targeting? How do they make the most money?

Their main source of profit are the customers with revolving debt. For the most part, they only make minimum payments, allowing interest to be charged and build up. They’ll pay it off later, but they’re also lining the wallets of the credit card companies.

Charging From Retailer 1 - 3%

The second source of profit are the people who pay in full, all the time. The credit card companies don’t make their money from the cardholder but instead make their money here from charging the retailer 1 - 3% as a transaction fee. These types of customers aren’t a huge source of profit, but they add up. 

Like anything, there are people who exploit the system for free stuff, and there are even some people who will never pay anything.

Whom do these companies seek out the most?Who are they trying to lure in the most.

Uneducated Population About Credit Card System Works

Firstly, there is the uneducated population. Members of this group typically have little idea how the card or system works and treat the card as if it was not real money being spent. Credit card companies love them because they end up owing a lot of interest.

They Want To Bring Back Of Their Old Costumers

The second group that is targeted is composed of people who no longer use the cards because of credit card problems in the past. The companies give them lucrative and special incentives to try and bring them back. 

Ultimately, a credit card company is a business, just like a restaurant, grocery store, or manufacturer, and as long as people keep using their services, they will more than likely make money. And a lot of it too.