[maaku]

You need to pay money to get a credit card?

As for wire transfers, they are most definitely not free to send or receive in the US. Fees are on the order of $25 each way depending on the bank, and actual humans and faxed forms are involved.

[halviti]

I don't know how it is in Germany, but in my country you pay for credit cards, and the amount you pay for the card determines how much insurance you have, as most all provide some type of travellers/medical/theft/etc. type of insurance.

Everyone pays their credit cards off every month because it's the law. If you are unable to pay, you can work out arrangements with the bank. If you need to use lots of money you don't have, you ask the bank for a loan and pay it back gradually.

It's my understanding that in the US, card companies make their money off fees and interest, which to me sounds like a much less appealing system designed to take advantage of the consumer.

[throwaway160303]

I suspect the fees+interest thing is mostly a cover story. As unflattering as it seems, I'd be unsurprised to learn that the three pages of fine print are a calculated display, to make it seem as though they're merely not-entirely-oriented-to-the-public-good but otherwise aboveboard private corporations. And it's not as if they don't get some income from putting the screws to those short on cash, but if that were the extent of it then I should never get a credit card offer, ever. My only credit history is on-time rent payments, and my employment history + no dependents + no college loans should make it obvious that I would never generate any income from late-payment fees or interest. And yet, I've received offers throughout my adult life.

But even if they never saw a penny of income directly from me, what they would still get out of it would be the data. And insight into the purchase habits of consumers with plenty of expendable income - the same people that would otherwise be a losing proposition for a business that actually relied on failure to pay on time to stay afloat - seems like it'd be far more valuable than the entirety of what they'd be able to squeeze out of the already-cash-strapped.

I'm actually highly impressed at the extent to which they're completely successful in focusing the public discussion on their "outrageous" and exploitative policies. They put on a thoroughly convincing show of fighting tooth-and-nail against regulations to reign in that behavior. But I think it's because, if it ever got seriously done, people would start asking how it was they were still in business - and they would definitely still be in business. But the finance operation is just how they collect the raw material for their actual product.

[eyeJam]

I think you have an interesting argument here but I would like to raise some points as counter-arguments:

1. Your argument is premised on the fact that since you personally have been offered a credit card, and you personally have almost no credit history, that therefore credit card companies don't make money from charging interest on late-payments. That's an absurd premise.

2. I believe, based only on my subjective observations, that you are the exception in your use of credit. Many people are irresponsible in how they use credit cards and end up paying exorbitant interest to credit card companies. Mostly lower-middle class individuals who are trying to live beyond their means. In Canada the average citizen carries ~20 000$ of personal debt (excluding mortgages) and the majority of that is credit card debt.

3. I think you're ignoring the "brand" value of having market saturation for your product. For example, Coke vs Pepsi. Yes they are not exactly the same product but they're very similar and there's no doubt that Coke has reaped a huge benefit from having dominant market share. When you go to a diner and order a burger, and they ask you what you want to drink, if you want a cola you say "I'll have a Coke please". Its understood by that request that you want a cola, and would likely be okay with either a Coke or a Pepsi, but regardless you said Coke, and there's the value of market saturation. So yes the credit card companies want to get as many customers as possible to use their product in an attempt to saturate the market.

4. Credit card companies also charge merchants for using credit cards so even if the customers paid all their bills on time the credit card companies would still be making money. I don't imagine they make the majority of their money from charging merchants but it is still revenue they want in their coffers.

5. Your final point borders on a conspiracy theory.

[maaku]

Perhaps. But it means that in the US banks pay you to setup credit cards. Rewards credit cards can have sign up bonuses valued in the hundreds of dollars. They also have annual fees though, but anyone without terrible credit can get a no fee card with a smaller bonus. Most credit cards pay yoy to use, in the form of cashback bonus or rewards. Insurance is provided without fee and to some extent by law.

Wire transfers are absolutely unheard of at the consumer level outside of things like escrow for a house.

[yardie]

This is why I prefer to work with international banks, even in the US. If they don't know what an IBAN is I don't bother. HSBC is pretty good in this regard. Minus the money laundering.

[justincormack]

I can make them online, but they are still stupidly expensive