Credit Cards: Banks' Profit Key
Squirrel reports banks may break even on credit cards with timely payments; profits primarily from late fees, per Simplicity KiwiSaver.
March 19, 2024
Simon Rowles
Founder, CEO
Bank Profitability on Credit Cards
A report from the mortgage broking firm Squirrel suggests that banks might only break even on credit cards when customers pay their balances on time and avoid accruing interest.
The analysis indicates that some of the income from interchange fees is used to fund their rewards programs.
Additional Insights from Simplicity KiwiSaver
Supporting this view, Simplicity KiwiSaver points out that significant profits for banks likely originate from late payment fees and other penalties associated with credit cards.
