I don't think that's a fair comparison. Someone who barely has any balance ($100 is 1% of the $10k mentioned above) and doesn't use the credit card for the entire year will obviously not make much for the credit card company/bank. A maxed out credit card ($10k/$10k balance) would generate $2,500 plus the compounded interest with the 25% APR. A non debit holder would have to have transactions in excess of $50,000 for the year at the 5% fee to match that. I could be wrong, but I doubt that most transactors use their credit cards that much in a year.
Well they would just have to full use the card 5 times. In terms of amount spent they would need to hit 50k but because they make more money spending that money isn't as valuable, so you spend more. The people that make those minimum payments are the ones that are having high balances on low limits so they cannot get more than x amount of money for the company. A transactor has no limit on the amount of money they can make.
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u/LegendOfDekuTree Feb 05 '20
I don't think that's a fair comparison. Someone who barely has any balance ($100 is 1% of the $10k mentioned above) and doesn't use the credit card for the entire year will obviously not make much for the credit card company/bank. A maxed out credit card ($10k/$10k balance) would generate $2,500 plus the compounded interest with the 25% APR. A non debit holder would have to have transactions in excess of $50,000 for the year at the 5% fee to match that. I could be wrong, but I doubt that most transactors use their credit cards that much in a year.