Yes credit cards are great, for those who use them carefully. What’s more, they are often free to use, and sometimes they even offer small cash rebates, again, for those who use them carefully. However, we have tons of data and experience showing us that many, if not most, credit card holders will not be so careful.
Of course, we don’t want you to be careful. If you want it now, buy it now, worry about paying for it later. In fact, we set all sorts of traps that make careful use difficult. One infraction of our rules, you know, the ones in tiny print, and we got you. Be a day late, we’ll collect a late payment fee and interest at rates that should be illegal. We can charge 15%, even 20% or more, and lots of people keep paying it. What’s more, we’ll continue charging you interest on new purchases until all is paid in full.
In other words, we don’t make it easy to pay on time. We like those on-going high interest rate loans that our credit card customers keep paying. Too bad the gov’t made us put those little charts on your monthly CC bill that spell out what happens if you pay only the minimum due. Like magic, an $800 bill can quickly become a $1,000 bill. Fortunately for us, we know that lots of people think in the short term, more than the long term. Charging stuff and paying outrageous interest rates has become normalized for lots of credit card holders: we owe them all a big THANK YOU!
Oh and even those customers who wise up and get angry at our high rates and sneaky practices tend to stay with us. Credit cards have become nearly essential for today’s consumers. Try buying stuff online or renting a car without a credit card. Yeah, you can sort of use a debit card, but we’ve got you there too.
There are lots of other ways we bankers have figured out how to make money from our unsuspecting customers. For example: