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When I applied for my new credit card, I answered several questions. In one of these I indicated that I pay off the balance of my card every month. The bank is not getting interest from me, since I do this. But I still get cash back for purchases I make with this card.

What is the bank getting out of the deal?

Ken - Enough about Monica
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  • The tagged duplicate is a good answer, but in addition to merchant fees there's also a percentage of people who intend to always pay it off who eventually won't, and will end up paying interest, so the banks have that going for them too. – Hart CO Jul 24 '17 at 13:48

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Banks also charge the merchant each time you purchase something. This is why you will often see stores have a minimum purchase amount for credit cards, or ban some of the higher fee ones completely (Amex etc).

Philip
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