Why did the bank launch a credit card?

We can also feel the crazy expansion of the credit card business from the real life: the issuing bank has also launched a number of card-opening ceremony, the first brush to encourage users to do cards, use cards; all kinds of tickets, meals and other drinks, encouragement User swipe card...

Commercial banks are enterprises that are profit-oriented. However, if card users do not use the credit card's installment, cash withdrawal and other functions, it is difficult to directly bring income to the bank. So, what is the bank’s money to let you do the credit card?

POS machine fee income

When the cardholder spends the card, the merchant needs to pay a certain fee for the credit card. The consumption of food and entertainment (including hotel restaurants, etc.) is 1.25%, the general category is 0.78%, the livelihood category is 0.38%; the handling fee will be 7: The 2:1 ratio is distributed to credit card issuing banks, pos machine banks (or other acquirers) and UnionPay.

For example, for 10,000 pieces of food and beverage consumption, merchants are required to pay a handling fee of 125 yuan, and the issuing bank can be allocated 87.5 yuan. In 2015, the credit balance of China's credit card at the end of the period was 3.1 trillion yuan, and the income of POS machines distributed by issuing banks was evident.

Credit card income

Although there are very few card users who use credit card installment and cash withdrawal functions, this is still a very substantial income (otherwise banks will not change the law to encourage cardholders to install).

At present, the bank's installment rate and handling fee are different. For details, you can consult the bank's customer service or check the relevant website.

It usually receives a handling rate of 0.6%-0.8%. For example, the consumption of 12,000 yuan, divided into 12 periods, the rate of each period is 0.6%.

The handling fee is 12000*0.6%*12=864 yuan.

The actual monthly return is 12000/12+864/12=1000+72=1072 yuan.

Among them, 1,000 yuan is the principal of each month, and 72 yuan is the monthly fee.

According to the formula of the annual interest rate = the number of transactions per period * period = 0.6% * 12 = 7.2%, but in fact this is not the actual annualized interest rate.

Of course, the handling fee is different from the interest rate. If you are repaying the principal every month, the amount of money that should be borrowed from the bank is less and less, then the general loan interest is declining. However, the handling fee has not changed!

That is to say, the handling fee of 72 yuan is always calculated based on the principal of 12,000 yuan. In fact, after a few months, the principal of the loan is declining. For example, the four-month principal of the loan is 12000-4*1000=8000 yuan, but the handling fee of 72 yuan per month is still so much, so the actual annualized interest rate is converted to 13.08%.

The longer the term, the higher the fee

Take ICBC as an example. The total installment rate of the three phases is 1.65%, and the phase 9 is 5.40%. It can be seen that the fee is increasing with the increase of the term.

Repayment in advance, the fee is also charged

If you have several installments and find that you are suddenly rich in money and ready to pay off the debt in one lump sum, if you need to repay the loan in advance after applying for the installment, it is not enough to repay the remaining principal. The handling fee for the period is paid.

At the same time, credit card overdue repayments and higher repayments at the minimum repayment amount are required to pay higher interest rates. Although this is not a regular income, it is not a small amount.

Increase the cost of credit card business is not high

Although the credit card business is increased, banks need to increase the credit card center and supporting business processes, but for the entire banking system, the cost is not high. The bank has a strict risk control system for Shenka people, so the probability of bad debts is relatively low compared to many loan businesses. Banks have a credit card business that can increase their customer base, attract more customer groups, and improve their brand and user experience. This, especially for small banks, is a very effective enhancer to improve adhesion.

Therefore, banks are not a big head. The huge income temptation of credit card business is the fundamental reason why they “post money” to let us do the card.