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:
“If you love those who love you, what credit is that to you? For even sinners love those who love them.”
—Bible: New Testament, Luke 6:32.
“There is undoubtedly something religious about it: everyone believes that they are special, that they are chosen, that they have a special relation with fate. Here is the test: you turn over card after card to see in which way that is true. If you can defy the odds, you may be saved. And when you are cleaned out, the last penny gone, you are enlightened at last, free perhaps, exhilarated like an ascetic by the falling away of the material world.”
—Andrei Codrescu (b. 1947)
“The slaves of power mind the cause they have to serve, because their own interest is concerned; but the friends of liberty always sacrifice their cause, which is only the cause of humanity, to their own spleen, vanity, and self-opinion.”
—William Hazlitt (1778–1830)