The Banks thrive on people with little or no credit, it's like hitting a jackpot to be able to offer their credit cards with no finance charge for the first year, right? Your being happy just to be able to own a credit card tend to take this as a great offer. Well, where they get you is in the FINE print, saying that if you are late at any time on your payments, the interest rate jumps to 18-24 percent on the dollar. Once this happens, you are caught up for a very long time, with the high interest rate, high late payment, and requests for the minimum monthly payments. Look Out! It can definitely look too good to be true.
Bank reimburses the amount to the trader at commission say 3 to 4% that is Bank's profit. Trader has no problem because his goods get sold faster because he allows sale on Credit Card and he gets cash from the Bank sure shot. and the customer is happy as he does not part with the cash immediately. Bank charges huge interest on unpaid dues which escalates it Profits further. Its a win - win situation for the Bank / Seller / Credit Card holder!
