few myths cleared up.....
the majority of c/c company revenue comes from the borrowers who DO NOT settle their account monthly....there are far more people who end up paying interest on credit than dont......quite simply for every 1 person who manages to pay off or transfer to another card with no interest transfer promotion there are 8 people who dont....(this also includes penalties for late/failed payments etc)
the second biggest source of revenue is of course the small percentage they take on monetary transactions and the even smaller percentage on purchases, dont forgot, most times you purchase on a c/c it isnt likely to be more than a few hundred (£/$/Euro/Whatever)....very few people have cards with enough limit to buy very expensive luxury items (ie cheaper-mid range cars, a new fitted kitchen etc) these things are usually done on loans or bankers drafts (a form of cleared cheque, dunno wot US equivelent is).
third source of course is partner revenue, ie companies they have links with concerning advertising etc.....
now, for credit scoring myths.....
your credit scoring isnt just based on credit card history, its based on everything financial you have done in your life thats been recorded somewhere in a financial institution......this includes credit cards, wages, inland bank accounts, mortgages, loans....plus other things such as penalties given against you for late payments etc.....
what they tell you when you sign up and pay to check your credit history isnt the full thing, thats the general summary, some things you are actually not allowed to see due to data-protection acts concerning the companies that your data has been collated from..
now, i never had a credit card till i was 26 (28 now), but i'd been paying money regularly in to a bank account from a regular job for a long time, i had no overheads due to living at home with my parents still, no dependants......so from what some people here are saying, i'd have a crap credit history as no one has loaned me money......so how come when i applied for a credit card they gave their Platinum card straight away with a £1,000 limit (US$1,800).......which i immediately blew on a surround amp.....i then applied for an Amazon Mastercard, they gave me a £1,750 (US$2,500 approx) limit no questions asked.........its simple, i've never proven i couldnt repay, even tho i missed a payment once due to general forgetfullnes....i have multiple direct debits for various services, a constant job......my history is good, and my rating is good....yet my past would indicate from what some people say im a risk....hah...obviously not.
Oh, and Capital One are giving me a credit card, apparently it will have a limit big enough to handle the balance transfers im doing and then some.....those are around £800 total (summer is quiet for revenue for me so paying off the last of my home cinema is going to happen once september and the winter months hits, hence moving money to an interest free promo card with Cap1).
Students are usually offered credit as the card companies know there is a)a good chance the student will get a job and pay it back, or if not b)their parents will get them out of hock and pay it.....lol....oh and if you are a good student and do pay it back it will stand you in good stead as you get older for more credit....
there is one time having multiple credit cards can be bad tho, when applying for a mortgage....having too many cards shows you have a desire to spend willy-nilly, something mortgaging banks dont like.........
oh, my source of info is my sister who has worked for various banks/card companies, including the big clearing houses, foriegn transfers, even the Queens bank for a while...heh......
its always possible card companies outside of the UK work their ways differently, but i'd be surprised if it was that much different with a country like the USA.....
(btw, my job only earns me £13,000 a year and that includes my expected comission..thats about US$19,500 a year...not a bad amount of credit given for the salery)
the majority of c/c company revenue comes from the borrowers who DO NOT settle their account monthly....there are far more people who end up paying interest on credit than dont......quite simply for every 1 person who manages to pay off or transfer to another card with no interest transfer promotion there are 8 people who dont....(this also includes penalties for late/failed payments etc)
the second biggest source of revenue is of course the small percentage they take on monetary transactions and the even smaller percentage on purchases, dont forgot, most times you purchase on a c/c it isnt likely to be more than a few hundred (£/$/Euro/Whatever)....very few people have cards with enough limit to buy very expensive luxury items (ie cheaper-mid range cars, a new fitted kitchen etc) these things are usually done on loans or bankers drafts (a form of cleared cheque, dunno wot US equivelent is).
third source of course is partner revenue, ie companies they have links with concerning advertising etc.....
now, for credit scoring myths.....
your credit scoring isnt just based on credit card history, its based on everything financial you have done in your life thats been recorded somewhere in a financial institution......this includes credit cards, wages, inland bank accounts, mortgages, loans....plus other things such as penalties given against you for late payments etc.....
what they tell you when you sign up and pay to check your credit history isnt the full thing, thats the general summary, some things you are actually not allowed to see due to data-protection acts concerning the companies that your data has been collated from..
now, i never had a credit card till i was 26 (28 now), but i'd been paying money regularly in to a bank account from a regular job for a long time, i had no overheads due to living at home with my parents still, no dependants......so from what some people here are saying, i'd have a crap credit history as no one has loaned me money......so how come when i applied for a credit card they gave their Platinum card straight away with a £1,000 limit (US$1,800).......which i immediately blew on a surround amp.....i then applied for an Amazon Mastercard, they gave me a £1,750 (US$2,500 approx) limit no questions asked.........its simple, i've never proven i couldnt repay, even tho i missed a payment once due to general forgetfullnes....i have multiple direct debits for various services, a constant job......my history is good, and my rating is good....yet my past would indicate from what some people say im a risk....hah...obviously not.
Oh, and Capital One are giving me a credit card, apparently it will have a limit big enough to handle the balance transfers im doing and then some.....those are around £800 total (summer is quiet for revenue for me so paying off the last of my home cinema is going to happen once september and the winter months hits, hence moving money to an interest free promo card with Cap1).
Students are usually offered credit as the card companies know there is a)a good chance the student will get a job and pay it back, or if not b)their parents will get them out of hock and pay it.....lol....oh and if you are a good student and do pay it back it will stand you in good stead as you get older for more credit....
there is one time having multiple credit cards can be bad tho, when applying for a mortgage....having too many cards shows you have a desire to spend willy-nilly, something mortgaging banks dont like.........
oh, my source of info is my sister who has worked for various banks/card companies, including the big clearing houses, foriegn transfers, even the Queens bank for a while...heh......
its always possible card companies outside of the UK work their ways differently, but i'd be surprised if it was that much different with a country like the USA.....
(btw, my job only earns me £13,000 a year and that includes my expected comission..thats about US$19,500 a year...not a bad amount of credit given for the salery)
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