How to Make Credit Card Companies Pay You

Here's a piece I found from Money on why you should pay an annual credit-card fee. It's no a masterpiece (nor an article I agree with in most parts), but there are two pieces of information in it that I found interesting. The first is on how credit card companies make money:

A recent report from the Government Accountability Office estimated that about 70 percent of the credit card industry's revenue comes from interest and penalty rates, with penalty rates accounting for a growing portion.

No surprise here. Almost everyone know that banks love people to carry balances and they've been more aggressive than ever lately with the fees. That said, I had never seen the 70% number -- though it makes sense now that I do.

Here's the second piece of info -- also not a shock when you think about it:

Those who carry balances on which they pay interest and fees are subsidizing cardholders with no revolving balance who may even be in rewards programs, said lawyer Michael Donavan of Philadelphia-based Donavan and Searles.

Heh.

Via http://www.freemoneyfinance.com/

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