According to the American Bankers Association, there are over 300 million credit cardholders in the US as of 2024. What’s truly disturbing is that these same US credit cardholders started the year 2024 with almost $900 billion dollars in credit card debt.

So with this staggering and surmounting level of credit card debt, you might be asking yourself, “How in the world do credit card companies make money?” Read further about answers to this question along with some tips about how you can keep some of this money for yourself.

How Credit Card Companies Operate

The term “credit card company” is actually a cooperative between two different entities: Issuers and Networks.  The world of credit card usage works in tandem with these two factions.  Issuers are credit unions and banks such as Chase or Bank of America. They issue credit cards to those who apply.

If approved for a credit card from an issuing bank, you are essentially borrowing from this bank every time you make a purchase with your card. Credit card networks, on the other hand, are companies that own the purchases and transactions on your card.

To explain, funds move through many different avenues when you make a purchase on a credit card.  A network such as Visa or American Express organizes all these transactions so that you are billed for charges each month, and the purchase funds are safely delivered to the correct merchant’s bank.

Top Ways Credit Card Companies Make Money


As you may expect, credit card companies make most of their money off of you, the consumer (and user of the card).  They also make money from the merchants who receive funds from credit card purchases. Money made from merchants is pretty straightforward.

Credit card companies charge merchants such as Amazon or Wal-Mart annual fees and/or per-transaction fees for the convenience of allowing consumers to make purchases via credit cards at their establishments.

The real money, however, comes from you, the consumer.  The lion’s share of revenue gained by credit card companies is from – you guessed it – income associated with late payments.

In fact, the top credit card companies hauled in $176 billion dollars in late fees and interest in 2024 alone. While late payments result in the majority of income for credit card companies, there are other lesser-known ways these mega-billion earners make money. Here are a few other ways companies like MasterCard make money.

Cash Advances

While pulling cash from your credit card at an ATM machine is certainly convenient – it can add up to a lot of money in a credit card company’s pocket.  Every time you get a cash advance on your card, a transaction fee is charged.  These cash advance fees can range between 2% to 5%, or sometimes it might be a flat $5.00 (or more) fee.

Balance Transfers


Some credit card companies charge a fee if you transfer your balance to another credit card. Many card users opt to transfer balances to a different credit card with a lower interest rate. While this is a great way to reduce monthly payments, most consumers don’t realize that some credit card companies can charge anywhere from 3% to 5% of the entire amount transferred.

Annual Fees

Not all credit card services utilize annual fees.  However, the ones that do tack on yearly fees are typically issued to people with poor credit, or who are high credit risks.  Annual fees may also come into play if you carry a high rewards rate on a particular card such as the American Express Platinum card.

How You Can Get In On The Money-Making Game

Now you are aware of the most well-known (and not-so-well-known) ways credit card companies make money off you. But do you know there are credit card mistakes you can avoid so you can beat the credit card companies at their own money-making game?  Read further about ways you can stop feeding your hard-earned cash to the credit card company machine and start keeping it for yourself.

Pay your bill in full


This is a no-brainer way to stop overpaying credit card companies, but it’s the best tactic for keeping money in your pocket (and not to the mega money-making credit conglomerates).

Paying your credit card in full helps you avoid interest fees which can make loads of money for credit companies and rob you of your much-needed funds. More importantly, paying your cards off in full is the number one way to build your credit or fix a bad credit score.

Pay your bill on time

Even if you can’t pay the full amount of your bill each month, do your best to pay what you can on or before the due date. As mentioned, late fees are the death knell to your bank account – and they are a needless expense. Make every effort to pay on time so you aren’t tossing money to the credit card companies on frivolous late fees.

Avoid hidden fees


Consider switching to credit cards that do not charge annual fees in order to save money.  Also, apply for credit cards with no transfer balance fees so you can avoid paying these if you choose to move your balance to a different card in the future.

Get in on the gains

If you have the money, and have even the slightest knowledge of investing – consider investing in credit card stocks. This is one of the more clever ways to beat the credit card companies at their game while potentially making a tidy profit. For example, Visa has consistently delivered a lucrative return on investments to its shareholders and frequently reports increasing highs in stock markets over long periods of time.

If you’re interested in being on the other side of the income-earning fence in the world of credit cards, read more about investing in credit card stock. In conclusion, the ways credit card companies make money largely boil down to careless management of money by cardholders.

Don’t fall prey to the ever-increasing victims who pay credit card companies through the nose due to lack of payment or late payment. Establish a responsible strategy for paying off your cards, and use them wisely. Doing so will see you keeping your money instead of needlessly paying your credit card company.