Credit Card companies have the game figured out. They profit from that compound interest on top of charging merchants. Everyone essentially is forced to have a credit card (to build a good amount of credit) and all merchants are forced to take credit cards (because that is the expectation).
We(consumers) are their vessel. Their products are marketed very well, enticing us to spend by rewarding and offering us a plethora of benefits. Their plan is working as cc debt raises over $1 Trillion, bravo.
That's why you always pay your balance in full. I haven't been charged interest since I really got into the points game. I was foolish in the earlier years and held balances.
Other interesting things of note: The processors fee, and the aquiring bank fee are usually static (fee per transaction, and fee per batch). However the card brand fee, and the customer Bank fees are usually commission based. Each card brand also charges different rates based on the type of product the merchant sells, and what product is being used, but the processors/aquirers usually average this, and give the merchant a flat commission rate, as well as flat transaction and batch fees. Fees also vary based on the input method, riskier ones (like CNP) cost more than others (like EMV), not to mention the charge back risk associated with CNP and MagStripe.
roxcyn MasterCard for instance, as offered by Compumundo (a local store). The explanation is two things -huge inflation and an official reference rate of 40% for deposit yields.
roxcyn but worry not! Ever since the country started an international borrowing frenzy, the IMF and Trump have been increasingly applauding the current policies. Not that there’s a link there. Or is it?
Hey thanks for sharing that information your channel is one of the best on TH-cam keep up the good work always look forward to the next video also would like to ask if you know anything about credit cards offered by the bank of the west based in California
Where do credit cards get their money from in the first place? Do they borrow that money? From a big bank & then pay the bank back & then make interest from the bank
Elavon is one of the acquirers. Always pay in the local currency. Even when the establishment is taking a pre-authorisation. You want to make sure you avoid DCC.
Thanks for sharing, I am wondering if you happen to know how they keep making profit by offering cashback? For myself, I pay full statement balance on due date each month for every card, never late or returned check. I think what they make from me just merchant fee I believe.
Can you do a video regarding the risks of automatic wired payments for bills? Some companies make absurd estimates charging their customers triple, and that's totally over the top of the spending habits. A customer of a bank needs a pin and a card to access their accounts, but with auto-payments, the charging company does not need the pin to access your money. eg ConEd, Verizon, National Grid, etc.
Great video! How is credit for credit cards lent out? As in what is it a function of? Is it based on the issuing bank’s deposits? Is there a limit to the amount of credit cards they can issue? How do credit cards really work?
You forgot 1 thing American Express open cards which charges have to be paid in full. they have annual fees. so your right that those cards don't have interest but they have annual fees.about there revolving credit cards actually a few of there cards are open cards most of there cards are revolving credit cards. now if somebody goes to Ruby Tuesdays as an example and let's say somebody charges 50.00 as an example and they use either a Toys R us Master card or Visa, Macys American Express or Costco visa do the stores also get a certain percentage? who has higher swipe fees? I know American Express has higher fees than Visa and Master card and I know Discover has higher fees than Visa and Master card but who has higher fees American Express or Discover? if some body goes to Ruby Tuesdays and uses their Macys American Express is it the same swipe fee as if somebody uses their Green card or blue cash card?
Merchant swipe fees are broken down into two fees. First is the swipe fee, a set fee for just having a transaction. Then there is also a percentage fee based off of the total amount being charged. Each card issued can have their own amounts for both fees. The percentage also has different tiers. If I remember correctly, without pulling a statement. The lowest fee was for plain cards (mostly credit branded debit cards), then you have the rewards cards, corporate, international. I think American Express had higher swipe fees as percentage. Going through a debit transaction only had a one time fee, but the fee was high enough that it didn't make sense on anything under around $20.
Most smaller retailers are probably clueless about this whole system, it's very overly complicated. The statements you receive are complicated and use codes/abbreviations. It's really just a terrible system. Then there is also yearly fee for PCI compliance, and monthly fees if you don't meet their processing minimums.
I do think the square credit processing and other non traditional processers are simpler but more expensive for anyone with daily credit cards that need to be processed. If you have any questions, just ask. I can pull out a statement if needed.
I'm not a merchant. I just like looking at his videos. I was just wondering who has higher swipe fees American Express or Discover. Arthur do you have a store in Bergen County or you do business somewhere else? what type of merchandise do you sell?
Great video. I love this. You should've mentioned getting money back in points and passing the fees onto the merchant instead of the customer paying for it tho
What exactly you mean by passing cost with small increase in price like all things for everyone or only if you use a credit card they increase it on you?
Many gas stations have a separate price for card purchases. Some smaller retailers won't even take a card if you don't purchases enough with them. Some places add a fee if you don't purchases enough from them. But then, don't forget, these merchant fees are built into their price structure. It's an expense for the retailer. If they didn't have to pay these fees, they could charge less for everything.
Everyone pays more to cover the cost for people that use card. Some places might be open and charge less if you pay cash but it's not something commonly seen in countries like the US.
Credit Shifu American Express released a new card. Cash Magnet, 1.5 unlimited cash back and more- no fee. Perhaps worth looking at. Its not every day Amex releases a new card. It’s definitely not the Cobalt card tho
It's WORSE!! There are also Cash advance fees. Let's say you use your credit card as a way to cover your overdraft which most people do. And you accidentally overdraft one day, and your CC fronts you the money. The Credit Card company then uses that 'loaned money' at a much much higher interest rate, that starts the moment that the money was fronted, and NOT 30 days like the other things bought on the credit card. And you can NOT pay that Cash money upfront, until you pay your credit card 100% in full, because most people pay off the statement, and not the full amount of the card. I'm blown away on how many people don't understand that CREDIT CARDS are making a lot of money off people. I hear people claiming all the time that they are 'gaming the system' because they are different, or they use the points, or etc, etc..
Credit companies make big money off dumb people who don't pay their bills in full on time. Even if you do pay the card off every month they still make money just from you using their card because of merchant fees. This is why it is stupid to use cash in this day in age because atleast when you use a card you get something back. Many places already bake the cost of these fees into the price of a product so for people that don't use cards your indirectly paying more for no reason. This is a big reason why people are looking for other means to facilitate payment to avoid these transaction costs. I.e crypto currencies.
I see multiple problems with your explanation. 1. You are confused between issuers (aka financial institutions/banks) vs. network providers (visa/mastercard etc.) 2. Amex has pay over time feature on most of their charge cards, through which they earn interest. 3. Amex charges high fee not because they don't earn interest income, but because they promise merchants better access to premium customers as well as better services (fraud protection, etc.)
Credit Card companies have the game figured out. They profit from that compound interest on top of charging merchants. Everyone essentially is forced to have a credit card (to build a good amount of credit) and all merchants are forced to take credit cards (because that is the expectation).
We(consumers) are their vessel. Their products are marketed very well, enticing us to spend by rewarding and offering us a plethora of benefits. Their plan is working as cc debt raises over $1 Trillion, bravo.
That's why you always pay your balance in full. I haven't been charged interest since I really got into the points game. I was foolish in the earlier years and held balances.
Amen
And Amex
I don't ever pay interest and pay off my cards monthly.
RobMar Life The only fee I pay is $195 a year on my Amex Gold card.
you pay a fee tho🤡
@@zd141 Not if they are a no annual fee credit card. Like my discover it.
zd lol do you have a kids debit card
@@zd141 Only if you're stuck on stupid
Other interesting things of note:
The processors fee, and the aquiring bank fee are usually static (fee per transaction, and fee per batch). However the card brand fee, and the customer Bank fees are usually commission based. Each card brand also charges different rates based on the type of product the merchant sells, and what product is being used, but the processors/aquirers usually average this, and give the merchant a flat commission rate, as well as flat transaction and batch fees. Fees also vary based on the input method, riskier ones (like CNP) cost more than others (like EMV), not to mention the charge back risk associated with CNP and MagStripe.
Some credit cards in Argentina are currently offered with a 109% APR. Not too shy to make money, huh?
Ignacio Nicolás Rodríguez ¿De veras? ¿Cómo se llaman las tarjetas?
roxcyn MasterCard for instance, as offered by Compumundo (a local store). The explanation is two things -huge inflation and an official reference rate of 40% for deposit yields.
roxcyn but worry not! Ever since the country started an international borrowing frenzy, the IMF and Trump have been increasingly applauding the current policies. Not that there’s a link there. Or is it?
Ignacio Nicolás Rodríguez gracias macri? Jaja
Ignacio Nicolás Rodríguez are you kidding me????!!!????
Hey thanks for sharing that information your channel is one of the best on TH-cam keep up the good work always look forward to the next video also would like to ask if you know anything about credit cards offered by the bank of the west based in California
Where do credit cards get their money from in the first place? Do they borrow that money? From a big bank & then pay the bank back & then make interest from the bank
Well credit cards are generally issued by banks, who have, um, money
Elavon is one of the acquirers. Always pay in the local currency. Even when the establishment is taking a pre-authorisation.
You want to make sure you avoid DCC.
5:56 Fix The audio !!
Thanks for sharing, I am wondering if you happen to know how they keep making profit by offering cashback?
For myself, I pay full statement balance on due date each month for every card, never late or returned check.
I think what they make from me just merchant fee I believe.
Finally someone that explains this
Can you do a video regarding the risks of automatic wired payments for bills? Some companies make absurd estimates charging their customers triple, and that's totally over the top of the spending habits. A customer of a bank needs a pin and a card to access their accounts, but with auto-payments, the charging company does not need the pin to access your money. eg ConEd, Verizon, National Grid, etc.
Only between 15% ~ 25% APR o:
Here in Brazil is between 180% ~ 400%
Much needed video! Thanks again Shifu :)
Hi mate, can you do a vlog on UK cards, the best for air miles points, cheers
Talking about merchant fees could be a good video and how to avoid them and what not
Great video! How is credit for credit cards lent out? As in what is it a function of? Is it based on the issuing bank’s deposits? Is there a limit to the amount of credit cards they can issue?
How do credit cards really work?
You forgot 1 thing American Express open cards which charges have to be paid in full. they have annual fees. so your right that those cards don't have interest but they have annual fees.about there revolving credit cards actually a few of there cards are open cards most of there cards are revolving credit cards.
now if somebody goes to Ruby Tuesdays as an example and let's say somebody charges 50.00 as an example and they use either a Toys R us Master card or Visa, Macys American Express or Costco visa do the stores also get a certain percentage?
who has higher swipe fees? I know American Express has higher fees than Visa and Master card and I know Discover has higher fees than Visa and Master card but who has higher fees American Express or Discover? if some body goes to Ruby Tuesdays and uses their Macys American Express is it the same swipe fee as if somebody uses their Green card or blue cash card?
Merchant swipe fees are broken down into two fees.
First is the swipe fee, a set fee for just having a transaction.
Then there is also a percentage fee based off of the total amount being charged.
Each card issued can have their own amounts for both fees.
The percentage also has different tiers. If I remember correctly, without pulling a statement. The lowest fee was for plain cards (mostly credit branded debit cards), then you have the rewards cards, corporate, international.
I think American Express had higher swipe fees as percentage.
Going through a debit transaction only had a one time fee, but the fee was high enough that it didn't make sense on anything under around $20.
Most smaller retailers are probably clueless about this whole system, it's very overly complicated. The statements you receive are complicated and use codes/abbreviations. It's really just a terrible system.
Then there is also yearly fee for PCI compliance, and monthly fees if you don't meet their processing minimums.
your correct it's overly complicated. even with Credit Shifu going over merchant fee with us. thank you for your answers.
I do think the square credit processing and other non traditional processers are simpler but more expensive for anyone with daily credit cards that need to be processed. If you have any questions, just ask. I can pull out a statement if needed.
I'm not a merchant. I just like looking at his videos. I was just wondering who has higher swipe fees American Express or Discover. Arthur do you have a store in Bergen County or you do business somewhere else? what type of merchandise do you sell?
Keep up the awesome work bro!
Is there any kind of disadvantage if you never carry a balance since the card issuers cannot make money off of you?
Lowers your credit score over time little by little. Banks don't like that
Great Video! very informative!
Thanks for the explanation!
Great video. I love this. You should've mentioned getting money back in points and passing the fees onto the merchant instead of the customer paying for it tho
Thank you. Very informative!
What exactly you mean by passing cost with small increase in price like all things for everyone or only if you use a credit card they increase it on you?
Many gas stations have a separate price for card purchases. Some smaller retailers won't even take a card if you don't purchases enough with them. Some places add a fee if you don't purchases enough from them.
But then, don't forget, these merchant fees are built into their price structure. It's an expense for the retailer. If they didn't have to pay these fees, they could charge less for everything.
Everyone pays more to cover the cost for people that use card. Some places might be open and charge less if you pay cash but it's not something commonly seen in countries like the US.
Interesting video 👍
Name of the song at the end?
This guy’s from Generation Tech! Ben, do a video on the Star Wars banks and financial system!
That’s actually not a bad idea
The Credit Shifu I know right?(I’m serious)
Merchant fees
Credit Shifu
American Express released a new card. Cash Magnet, 1.5 unlimited cash back and more- no fee. Perhaps worth looking at. Its not every day Amex releases a new card. It’s definitely not the Cobalt card tho
I got that card
It's WORSE!! There are also Cash advance fees. Let's say you use your credit card as a way to cover your overdraft which most people do. And you accidentally overdraft one day, and your CC fronts you the money. The Credit Card company then uses that 'loaned money' at a much much higher interest rate, that starts the moment that the money was fronted, and NOT 30 days like the other things bought on the credit card. And you can NOT pay that Cash money upfront, until you pay your credit card 100% in full, because most people pay off the statement, and not the full amount of the card.
I'm blown away on how many people don't understand that CREDIT CARDS are making a lot of money off people. I hear people claiming all the time that they are 'gaming the system' because they are different, or they use the points, or etc, etc..
That shirt makes him look like an Irish 80s R&B singer
Credit companies make big money off dumb people who don't pay their bills in full on time. Even if you do pay the card off every month they still make money just from you using their card because of merchant fees.
This is why it is stupid to use cash in this day in age because atleast when you use a card you get something back. Many places already bake the cost of these fees into the price of a product so for people that don't use cards your indirectly paying more for no reason.
This is a big reason why people are looking for other means to facilitate payment to avoid these transaction costs. I.e crypto currencies.
So it is more expensive to use credit cards?
Jared Highlands lolol no
Jared Highlands you make money
Jared Highlands no ur borrowing money and u have to pay back so it depends it can be expensive if u don’t pay back the money u borrowed
I see multiple problems with your explanation.
1. You are confused between issuers (aka financial institutions/banks) vs. network providers (visa/mastercard etc.)
2. Amex has pay over time feature on most of their charge cards, through which they earn interest.
3. Amex charges high fee not because they don't earn interest income, but because they promise merchants better access to premium customers as well as better services (fraud protection, etc.)
I miss the “Credit Warriors” intro 😉
Im glad I paid most of them off and down.....Bruh!!!
Second whats good credit kung fu Shifu