The marketing trend through credit cards has witnessed a rapid surge in the country, with credit card companies enticing customers through various offers. However, the question often arises about how these companies, offering a multitude of benefits, actually generate revenue from credit cards. Some credit cards provide complimentary access to airport and railway station lounges, with occasional nominal charges or even free access.
Despite these perks, credit card companies find avenues for earnings. Primarily, revenue is generated through interest and penalties. Many credit card users are unable to pay their bills on time, incurring interest charges and penalties. Additionally, companies charge customers for shopping on equated monthly installment (EMI) plans, contributing significantly to their earnings. Various fees play a crucial role in their revenue streams.
Some credit card companies impose annual and renewal fees, although these may be waived after customers reach a certain spending limit annually. Moreover, credit card companies earn from balance transfer fees, late payment fees, cash advance fees, foreign transaction fees, and other charges.
This diverse fee structure allows these companies to accumulate substantial earnings by consistently applying different charges. In essence, while customers enjoy the benefits and offers associated with credit cards, it is crucial to be aware of the associated costs and fees that contribute to the revenue model of credit card companies.
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