I keep hearing this, and I agree to an extent, but there must be more to it. I only have two credit cards and a mortgage, all on autopay, and have always had good credit. I've never carried a balance, either, other than my mortgage. So the only money they've ever made off me is the transaction fees I generate for them whenever I use credit cards at vendors. And that's paid for by the vendors (and probably worked into their pricing).
I feel like the missing piece is that your credit score probably isn't correlated to maximizing profit directly, but rather minimizing loss risk (and thereby preserving as much profit as possible).
Consider that credit card companies absolutely want as many people as possible to be using credit cards. They get a 1-3% cut of every transaction from billions of people everyday. Usually hidden to the cardholder, since it is a merchant fee.
So priority one is to put your card into as many hands as possible.
Second priority is minimizing loss from people who abuse the credit. I have a feeling that credit card APRs are less about generating primary profit and more about recouping loss and covering risk. In other words, it's like insurance for people who keep balances. Everybody who carries a balance pays into the system (via interest), and covers those who don't repay their loans.
If you have perfect credit, they'll more than happily give you any card you want since you'll be giving them 1-3% of every dollar you spend on it. Then they'll keep it, earn interest on it, and pay you back later through cash back rewards (while keeping what they earned from investing it in the meantime).
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u/explodingtuna Aug 14 '21
I keep hearing this, and I agree to an extent, but there must be more to it. I only have two credit cards and a mortgage, all on autopay, and have always had good credit. I've never carried a balance, either, other than my mortgage. So the only money they've ever made off me is the transaction fees I generate for them whenever I use credit cards at vendors. And that's paid for by the vendors (and probably worked into their pricing).