News for hackers. Stuff that matters.

A comment on More Americans are using ‘buy now, pay later’ services to pay for groceries. Parent comment

Re:More Americans are using ‘buy now, pay later’ services to... by crazygringo on Friday March 24, 2023 @11:59AM (#35290921)
> if everyone paid their balances in full and on time, credit card companies would still survive.

That goes against my understanding. Do you have a source for that?

I'm pretty sure credit cards make their money off of interest. It's not from the interchange fees from people who pay their balance each month, as those often go straight back to consumers through rewards programs, and just administration costs generally. The card I use most has no annual fee but 2% cash back on everything.

[ Parent | on HN ]
Re:More Americans are using ‘buy now, pay later’ services to... by scottLobster on Friday March 24, 2023 @12:05PM (#35291044)
The ratio depends on the credit card issuer, but often times the rewards are just a fraction of the fees charged.

American Express in particular makes more of their money from transaction fees and membership fees than interest. https://www.investopedia.com/articles/markets/012715/how-ame...

[ Parent | on HN ]
Re:More Americans are using ‘buy now, pay later’ services to... by crazygringo on Friday March 24, 2023 @01:08PM (#35292162)
Yes, but American Express is very much an outlier and always has been. It's also why many shops don't accept Amex, because it charges higher transaction fees.
[ Parent | on HN ]
Re:More Americans are using ‘buy now, pay later’ services to... by nunez on Friday March 24, 2023 @11:05PM (#35298866)
AMEX allows you to have a rotating credit line now on those cards.
[ Parent | on HN ]
Re:More Americans are using ‘buy now, pay later’ services to... by soco on Friday March 24, 2023 @12:10PM (#35291155)
Cashback is not really a thing around me (Switzerland) and other rewards are just practical jokes - like overpriced black socks subscriptions offered slightly less overpriced. Yet credit cards thrive.
[ Parent | on HN ]
Re:More Americans are using ‘buy now, pay later’ services to... by crazygringo on Friday March 24, 2023 @01:06PM (#35292122)
Yes but interchange fees are far lower in Europe.

In the US they're around 2%. In Europe they're more like 0.3%, which is why cashback/rewards aren't a thing.

My point is that interchange fees aren't where credit cards make money, it's on the interest of people who don't pay in full.

[ Parent | on HN ]
Re:More Americans are using ‘buy now, pay later’ services to... by medvezhenok on Friday March 24, 2023 @01:31PM (#35292574)
Some cards like AMEX Gold/Platinum don't allow you to carry a balance at all, and make most of their money via interchange fees.

There is a spread between rewards provided and actual fees (fees are closer to 2.5-4%, rewards usually top out around ~2%)

[ Parent | on HN ]