Question

How do credit card companies make money?

O (A) Fees and interest paid by cardholders
O (B) Investing your credit card debt
O (C) Fees paid by merchants
O All of them
O A and B
O A and C
OB and C

Answer 1

A and C

Step-by-step explanation:

Credit card companies get their income form the following three main sources

• Interest paid by cardholders
• Fees charged to cardholders' credit cards.
• transaction charges paid by merchants who accept credit cards

Interests form the bulk of income to the card companies. Typically charge interest arises when customers carry a balance from a month to the next. Fees charged include annual fees, late fees, cash advance fees, balance transaction fees, among others. Merchants usually pay a percentage for every transaction conducted via a credit card. The percentage ranges between 1% to 3 %.