How do Singapore banks make money from credit cards?

Banks will make money through the interest they charge on unpaid or rollover balances. With $288.4 million in rollover balances in Singapore, this amounts to over $69.2 million in interest for banks. In addition, many cards also come with annual fees, supplementary card charges and administrative charges.

Whenever you apply for a credit card (particularly in the streets), banks will also try to cross-sell you other (unnecessary) products such as a personal credit line or multiple credit cards, sometimes without even you realizing.

One added way they make money is also by charging retailers a rental installation fee for their card processing machines.

Moreover, they try to incentivise clients (us) to spend more money and ultimately indirectly increase the chances of us not being able to repay our balances. They frequently let us know that we only have to pay the minimum amount to keep our credit cards running, and once they realize we’re prudent with paying our balances, they increase our credit limits under the guise of us being good customers.

Credit Card companies on the other hand, make money in a very different way. They earn from the transaction fee on each purchase made. In Singapore, this was close to $45 billion in credit transactions in 2014. At about 2% charge per transactions, the credit card business is a very competitive and lucrative one.

Source: DollarsAndSense

I will direct you to this post where a similar question has been asked: https://seedly.sg/questions/how-do-banks-airlin...

Here is everything about me and what I do best.