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| I see a lot of things being a banker and a business owner.
Do not worry about the credit card companies getting shorted. On top of the fee they charge you, they also make money on the fees they charge the merchant who accepts credit card payments.
FWIW - About the most interesting thing I sometimes see is a high volume business that purchases a lot on credit cards. Say such business owner then gets 5 credit cards with a maximum borrowing limit of $15,000, each.
Let's consider one of those credit cards. The owner makes purchases of $12,500. 3 days later he makes a payment of $12,500. Then he charges another $12,500 in bills onto the card. Then he makes a payment of only $2,500 which makes his monthly payments equal to the maximum credit limit ($12,500 plus $2,500). Then he just continues this cycle over and over again in a billing cycle. Because the maximum payment of $15,000 has been paid, the credit card company charges no fee even though there is a balance on the card at the end of each statement cycle
Now consider that the owner always carries balances on that card that average $10,000 all the time. Again, there is no fee on the card because the owner is paying at least $15,000 per month in payments by churning that card over and over again each month.
Now consider that the biz owner is doing this on 4 other cards with an average balance of $10,000 each.
What you really here is on on-going interest free operating loan of $50,000 with those 5 cards. (5 cards x $10,000 average balance, each). And the credit card company loves it because they are making fees every time the business owner buys something from a merchant. The merchants are effectively paying the interest for this business owner on his 5 interest free credit card via the fees they pays to the credit card companies.. And, the merchants likely do not care much because there mark-ups are likely more than high enough to cover the fees without noticing much pain or they would not accept credit card payments to begin with.
Edited by Iowegian 2/5/2019 19:50
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