Some of this may be hard to hear, but believe me, it is important for consumers to know and understand this information. I've explained how the banks became credit card companies and I hope that we can all agree that someone who would borrow a dollar from you at 0.25% interest, then turn around and loan you that same dollar at over 20% interest, is not a friend.
So now, let me ask you if you are a friend or a foe of the credit card companies?
Don’t answer just yet...let me give you some more info first.
55 million Americans pay off their credit card balances down to $0 each and every month. The credit card industry calls those people “Deadbeats.” 90 million Americans do not pay off their credit card balances down to $0 each and every month. The credit card industry calls those people “Revolvers.”
Deadbeats are foes of the credit card industry and Revolvers are friends of the credit card industry. So, now, answer...are you a friend or a foe of the credit card industry?
Deadbeats are foes because the credit card company does not make any monthly interest off of them and does not make any fee income off of them with over-limit fees and late payments fees.
Though credit card companies make a small percentage from the merchants that the Deadbeats purchase from, that is all they ever get from Deadbeats.
Revolvers are wonderful friends of the credit card companies because they are able to make monthly finance charge income that, in turn, goes on top of the credit card balance, compounding to a point at which even the interest can result in over-limit and late fees. Revolvers are much more prone to miss payments or not make minimum payments, generating late payment fee income, again, which also compounds on top of the credit card balances.
So, now, answer...are you a friend or a foe of the credit card industry?
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