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Don't understand how cc companies stay in business giving me credit...

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Member

Don't understand how cc companies stay in business giving me credit...

Let's see, over the last 6 years, I've applied to 15 credit cards.

 

Never missed a payment or late.

 

Collected $3000 worth of rewards (ranging from opening to reward points etc)

 

Assuming the credit card company only profits from my transaction fees (e.g. 2% per dollar spent)...I would have to spend $150 000 over the 6 years for them to simply break even..

 

I've spent about $50K.

 

 

In theory, I should be the customer which they should stop giving credit.

Message 1 of 6
5 REPLIES
Regular Contributor

Re: Don't understand how cc companies stay in business giving me credit...

If you were the only person they were giving credit to, they probably wouldn't stay in business - but you're not and they're making tons of money from people who pay interest and fees. Don't worry about them, they do just fine. Smiley Wink

Message 2 of 6
Contributor

Re: Don't understand how cc companies stay in business giving me credit...

I don't have any statistics to back this up, but my guess is that there are very few people who use credit like you and I compared to the number of people who carry balances, pay late payment fees, ect.

Starting FAKO Score: 08/16/13 - EX: 702 EQ: 694 TU: 702
Starting FICO Score: 08/19/13 - EX: ??? EQ: 700 TU: ???
Lender Pulls: 02/28/14 - EX: 736 EQ: 716 TU: 748
Closed on 04/25/2014 - Loving it!
Message 3 of 6
Frequent Contributor

Re: Don't understand how cc companies stay in business giving me credit...

I am curious about this as well.

 

I've opened 17 cards since my first card 1 year and 5 months ago and when I'm done collecting my sign up bonus by the end of this year, I will have gotten back about 2,100 in rewards. I don't use my credit card THAT much. Less than 2,000 a month.

 

During my recent app spree, I've been getting instant approval after instant approval. And like the OP said, we should be the last people they give credit to.

 

So do CCCs on average, lose money on "responsible" customers and make up more than that from the irresponsible ones?

[10%+] Internet, Cable, Cell phone
[5%] Gas, Grocery, Amazon, Airline tickets, Drug Stores, Dept. Stores, Target, MyHabit
[3%] Restaurants
[2%] Everything Else
Message 4 of 6
Senior Contributor

Re: Don't understand how cc companies stay in business giving me credit...


techcrium wrote:

 

In theory, I should be the customer which they should stop giving credit.


Not really.  There are those that carry balances and pay more interest but carrying balances tends to be more risky (this is a very broad generalization).  It's a double-edged sword.

Message 5 of 6
Valued Contributor

Re: Don't understand how cc companies stay in business giving me credit...


techcrium wrote:

Let's see, over the last 6 years, I've applied to 15 credit cards.

 

Never missed a payment or late.

 

Collected $3000 worth of rewards (ranging from opening to reward points etc)

 

Assuming the credit card company only profits from my transaction fees (e.g. 2% per dollar spent)...I would have to spend $150 000 over the 6 years for them to simply break even..

 

I've spent about $50K.

 

 

In theory, I should be the customer which they should stop giving credit.


IDK if your math is right, are you saying you only spent 50k on your credit cards over the course of 6 years (8k/ year among all your cards?) Opening bonuses are loss leaders, where a bank is willing to be in the red to get your (hopefully long) business. 


   3/12 $3500     6/12 $1200      10/12 $1500   12/12 $3400    6/13 $12000      7/13 $5000      7/13 $2500       8/13 $2000    8/13 $6000

  | CSP (AU) $12,000 | Amex PRG (AU) | United $6,000 | OCCU $12,000 | Ink Bold | GM $3,200 | DCU $7500 | Luthansa $9000 | SPG $6,000 | Citi AA Executive $11,000 | Ink Plus $5,000                                                                         | EX 2/7 697 | EQ 10/27 721 | TU 12/15 719 |

Message 6 of 6