Isn't their transaction fee less than 5%? No idea if and how Chase profits from me as a credit card customer. I don't see any of their other CCs. I never paid interest.
Does Chase profit from my Chase Ink transactions? I only use it to get 5% cash back at Staples(GCs) and phone bill. I fully pay the bill off and never pay interest.
byu/ApprehensiveOne2866 inCreditCards
Posted by ApprehensiveOne2866
9 Comments
Likely not.
The thing is that Chase has so many customers one card for one guy isn’t exactly making a big budget impact. Even the larger subset of people isn’t that significant in the grand scheme of nearly 1.5 trillion in CC transactions per year.
The 25k cap stops the bleeding at a very reasonable point. 5% of 25k is only$1250
On top of that you most likely have a Sapphire or Ink Preferred, so they’re making money off you on that and other Chase cards you may have.
Chase doesn’t need to profit on every single individual account to turn a profit in aggregate. There are many people defaulting on their debt and losing Chase far more money than you are. But the income from interest, swipe fees, AFs, etc makes up for it and earns them a tidy profit.
Banks such as Chase keep the interchange fees “swipe fees” incredibly quiet. Mostly a negotiating game between Visa / Mastercard. Some merchants such as Walmart have a locked in rate which means if you spend $50,000 or $1. It’s the same rate. It’s referring to the volume of transactions.
If you really want to get under Chase’s profitability. Use a mobile wallet so they pay a small cut to Apple / Google / Samsung
They aren’t making money from you, but they don’t have to. They make enough money from other customers who don’t maximize.
Chase profits on that credit card interest at 20%! +. They are banking on it
Cash back rewards are the banks sharing the transaction fee with you which is why transaction fees on credit cards are higher. Usually it’s 3% so they usually break even with the other rewards but when you’re only using it for 1 category they’re losing money or pitching into other peoples interests rates to pay for it.
Chase doesn’t profit from your transactions, but that’s fine as far as they’re concerned. Card issuers make their profit from scale. They know that every single customer isn’t going to be profitable, and it’s not worth the effort (and it would just be bad business) to run around trying to weed out every unprofitable customer. They’re perfectly willing to “lose” money on some customers of a card if they _make_ money on enough other customers of that same card. It’s all viewed in the aggregate on the product level. (That said, issuers will come after you for violations of terms of service.)
You do get people in here who say self-aggrandizing things like “Chase must hate me,” like they’re some kind of outlaw for using their Ink card only at Office Max. And like Chase gives a shit about their $10K in annual spending when it handles $1.3 trillion a year in purchase volume.
Issuers expect a certain number of maximizers. The problem arises when a card _only_ attracts attention from optimizers and maximizers. US Bank Altitude Reserve is a now-classic example of a product that never appealed to enough “real” people.
I do that with my Costco Visa (used for almost all purchases) and Prime Visa (used only for Amazon and Whole Foods). I run everything through the cards and the payoff each month.
Other customers are subsidizing your good consumer spending habits. They hope that someday you run into a cash flow dilemma or major purchase like a washer/dryer or air conditioning unit and carry a balance.
I also forgot to post that Chase (and everyone else) profits from selling and marketing your info- like Facebook, Google, etc if you don’t see a profit it is likely YOU ARE THE PRODUCT. They monetize YOU- so if say an auto company wants to target well heeled customers with good habits in a certain income group, etc.