Crazyboy's Banking Lectures: Credit Cards

Many of us are using credit cards in our daily lives (atleast I can safely assume that all working professionals are using it). Have you ever thought that why banks are giving you loan for free for 40-55 days.
Infact have you thought that why credit cards came into existance?

Just consider following observations:
  1. Banks do not charge you a penny if you pay your credit bills within your stiuplated time (billing cycle).
  2. Banks give your hefty credit limits as good as 150 thousand Rs to 350 thousand rs.
  3. Banks spent a lots of money in creating the softwares which handles the credit card information and securities.
  4. Banks do spend money in creation and maintainance of credit cards.
These are a few observations that are indicating that banks are doing charity and not earning money from credit cards. But, as we all know that banks are profit making organizations.

How on the earth do you think that banks makes money with these credit cards business? Do post your ideas, We will validate that and then I will try to explain the whole credit cycle and the fundamentals how banks earn money from the credit cards.

-CB

Replies

  • PraveenKumar Purushothaman
    PraveenKumar Purushothaman
    Yeah, but someone said me that the major income is from the repayment dues... 😲
  • Anil Jain
    Anil Jain
    That's absolute truth.
  • silverscorpion
    silverscorpion
    So, why not explain the credit cycle now? 😀

    (The request might be a 'little' late, i guess.. But still.. 😀 )

You are reading an archived discussion.

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