12/28   My credit card gives me 1% back on my purchases and 5% back on
        Shell gas stations. I always pay everything back each month. How
        the heck do credit card companies make money? Am I still considered
        a valued customer?
        \_ Where can I get such credit card? -akopps
                \_ Pick up an application at any Shell station.
        \_ For every person like you (and me) that pays everything off every
           month, there's a few dozen fools that work up a huge debt.  Don't
           worry about the CC companies.  They'll squeak by without you.
           \_ Credit card companies make more money on vendor fees than
              on finance charges.  Lets say you charge $500/month and the
              card is charging the vendor 1.75+%.  The money is tied up an
              average of about 25 days if you pay on time so they can cycle
              about 13 times a year (slightly less because of uneven spending
              patterns around the holidays).  That's 22+% on the money in
              play, with finance charges from rotating debt being gravy
              on top of it.  Subtract for clerical and collection
              overhead and they're still doing just fine. -mel
                \_ Mel, no.  The point was that most people _dont_ pay on time.
                   This means that the $500 someone charges in month 1 becomes
                   $525 (randomly chosen number for example) in month 2 and up
                   and up forever right to their $5k limit (randomly chosen).
                   Most people only pay the minimum each month on each card
                   \_ twink- min is 2-3%, more than interest.  -jor
                   which not only doesn't pay _any_ principal (sp?) it doesn't
                   even cover the total interest!  The lesson here is that most
                   people are too dumb for their own good and either end up
                   way over paying on their purchases or for quite a few folks,
                   end up declaring bankruptcy which screws up all sorts of
                   stuff for years and years.
                   \_ twink- min is 2-3%, more than interest.  -jor
                        \_ Survey says, "NNNNNN!"  Try again.
        \_ The vendors are paying transaction costs and for the (inflated)
           costs of things like terminals. Also, you're not considered as valued
           a customer as one who tends to carry at least some balance. --dim
                \_ They're legally not allowed to pass the cost along.
                \_ ^legally^contractually.
                   \_ I was pretty sure it was "legally".  Oh well.  Anyway,
                      a contract is 'legally' binding.  -feeling semantic
                   \_ Where did I say that they did? Of course, the costs
                      are hidden in the "operating expenses" anyhow and
                      the customers paying cash get to contribute too. --dim
        \_ Vendor pays 1.5-5% transaction fee, dependent on the volume.
                \- they are still making money on the gas purchase, they can
                sell you name and consumer info, and occasionally you might
                slip up on a payment. good point about making money from the
                vendors. --psb
                \_ Even if the credit card takes no profit, they still
                   have your cash flowing through their company, even
                   if you pay your bill on time. Anyone with billions
                   and billions of dollars flowing through their doors
                   on a constant basis will find a way to make money off
                   it. BTW: 5% on shell gas is usually more expensive
                   than other stations. Cheaper to go to yer local
                   Cheveron or Exxon with a lower price, get yer 1%
                   most of the time. Your milage may vary.
                   \_ Even cheaper to go to Thrifty station on Telegraph.