Do banks make money by giving free lifetime credit cards?

Banks do not make money from the cardholders. At least in India they do not as most people use the credit card as a charge card paying their bills at the end of the month. Yet they manage to offer discounts, cashbacks and free lifetime cards. read more

A free life time credit card is a bait the banks use to allure prospective customers to accept the credit card. Banks usually charge around 3.5℅ per month on the outstanding liability that you may have through use of your card and that's a real money spinner. read more

Banks are smart. They make money from credit cards from about three or four sources. In fact, credit cards are among the most profitable consumer bank products cygnet fight for your business tooth and nail! Credit cards balances are a loan owed by the card holders to the bank. So the first source is the interest charges on your month end balances. read more

Your bank loans your money out to others at a cost to the lendee, in the form of an interest rate (think: mortgages, student loans, car loans, credit cards, etc.). Banks collect money off the interest paid by borrowers, and a small amount of that interest is given back to customers’ bank account. read more

Typically the Issuing Bank would pay the Merchant bank via the Card Network the money in couple of days. So the Merchant Bank is not out of funds. The Issuing Bank on the other hand would have given you a credit of say 10 to 50 days depending on when you made the transaction and when the payment is due. read more