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pkgary t1_j46uijc wrote

Reply to comment by lollersauce914 in USA Credit Cards: Card Balances v. Interest Rate [OC] by rosetechnology

Im confused, why is this the case? I would assume that the card balances being higher means they can charge less interest for the same revenue. Is it not the card balances that are being charged interest?

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lollersauce914 t1_j46un9u wrote

Card balances means that the issuer is paying merchants but not getting paid back by the card holder. It also implies a higher risk of default. You don't make money on interest until you start getting paid back.

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pkgary t1_j46voxg wrote

Ah, that makes sense, thanks!

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