One of the things you keep hearing online is that credit cards are gamed against the individual. Is this true? is so, apart from paying off all charges before interest gets accrued, is there anything else a person needs to do to come on top of the system?
It's gamed against people who lack basic financial literacy, which is a depressingly large number.
Credit cards make money three different ways:
- Fees charged to the merchants.
- Direct fees for customers uneducated enough to pay this
- Interest charged to customers uneducated enough to carry a balance
My current "main" card has zero fees, I get about 2.65% cash back on all charges and I don't carry a balance. It's a Visa card that typically charges 3% to the merchants, but the bank is still quite happy to live on a 0.35% margin.
Fees and interest are icing on the cake and the reason why this is such a profitable business. Most customers know that these are terrible things to pay for but but they choose to do so and they pay a hefty price for it.