Doesnt the credit card company make loses?

[stella7]

Before one is given a credit card,i thought they have to first investigate their financial status,but i have seen some people who have bad credit given more credit cards.Doesnt the credit card company make loses on such people?

[moonmagick]

From my experience working the customer service lines for a credit card company, I have to say, they arent losing much.

Yes, there are "charge offs" that never pay. But the vast majority of people carry a balance and pay the minimum monthly payment. The credit card company is making a killing in interest alone. Then add to that the people who are so close to their credit limit, that the interest for the month puts them over, (the people that are this close are pretty much there most of the time) Everytime this happens, the lender gets an overlimit fee from the customer. Then you have the huge group of people who are late every month, these also get a fee. Trust me, the credit card company LOVES the people with poor payment history that carry a balance. They are making a fortune off of these poor people. And the ones that try to scrape by and pay every month far outweigh the ones who just say "forget it"

[nangel78]

More than likely, they make a fortune off of the interest charged on these cards as well.

[moonmagick]

Oh yes. Tons of interest. Because most of them have a sliding rate scale. You start out with a nice rate, but for every time you are late, etc the rate keeps increasing until it reaches the maximum allowable by law.

[Calypso]

Yeah, I wouldn't waste much time feeling sorry for the credit card companies. They deliberately target low income people and make it way too easy for them to get in deep. (My one credit card sends me blank checks every single month, even though I've told them to stop.) Most people will try to pay back what they owe, and even if they eventually give up or take bankruptcy, chances are it will be after several years of minimum payments, and the company will still have made money from them.