Why are interest rates so high on credit cards?

Question asked by: mrquestion

Asked on: 27 Jan 2010

Interest rates are so high on credit cards to enable the credit card companies to get a good profit. That's pretty much all there is to it!

If you think of it, most credit cards for consumers have no charge.

This means there are large costs for the companies to bear: creating the cards, credit checking, process transactions, sending out statements and all the rest of it.

Now if no-one paid interest they would make no money. And the majority of card holders pay off their full balance a lot of times, this means that those who don't have to pay high interest in order for the credit card operation to still be profitable.
By: knowitall
Replied at: 27 Jan 2010
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