Credit card interest is the principal way in which credit card issuers generate revenue. A card issuer is a bank or credit union that gives a consumer (the cardholder) a card or account number that can be used with various payees to make payments and borrow money from the bank simultaneously. The bank pays the payee and then charges the cardholder interest over the time the money remains borrowed. Banks suffer losses when cardholders do not pay back the borrowed money as agreed. As a result, optimal calculation of interest based on any information they have about the cardholder's credit risk is key to a card issuer's profitability. Before determining what interest rate to offer, banks typically check national, and international (if applicable), credit bureau reports to identify the borrowing history of the card holder applicant with other banks and conduct detailed interviews and documentation of the applicant's finances.
Read more about Credit Card Interest: Interest Rates, Calculation of Interest Rates, Interrelated Fees, Methods of Charging Interest, Methods and Marketing
Famous quotes containing the words credit, card and/or interest:
“The world is a puzzling place today. All these banks sending us credit cards, with our names on them. Well, we didn’t order any credit cards! We don’t spend what we don’t have. So we just cut them in half and throw them out, just as soon as we open them in the mail. Imagine a bank sending credit cards to two ladies over a hundred years old! What are those folks thinking?”
—Sarah Louise Delany (b. 1889)
“In the game of “Whist for two,” usually called “Correspondence,” the lady plays what card she likes: the gentleman simply follows suit. If she leads with “Queen of Diamonds,” however, he may, if he likes, offer the “Ace of Hearts”: and, if she plays “Queen of Hearts,” and he happens to have no Heart left, he usually plays “Knave of Clubs.””
—Lewis Carroll [Charles Lutwidge Dodgson] (1832–1898)
“Parents do not give up their children to strangers lightly. They wait in uncertain anticipation for an expression of awareness and interest in their children that is as genuine as their own. They are subject to ambivalent feelings of trust and competitiveness toward a teacher their child loves and to feelings of resentment and anger when their child suffers at her hands. They place high hopes in their children and struggle with themselves to cope with their children’s failures.”
—Dorothy H. Cohen (20th century)