“How do they make money on you?”
By charging every business a % for taking your card.
If you pay 4% net to borrow (includes mortgage deduction) you can make 8-9% tax free. The mortgage payment is simple interest and the IUL growth is compounded.
But hey, keep all that equity inside the walls of the house. When values go down you lose. Natural disaster, you lose. Unemployed and want a loan, not qualified.
Put some money into a tax free IUL and be your own bank. No non-preferred debt. Pay cash whenever for whatever.
Oh, did I mention the death benefit.
Equity squirrels. Have fun and keep fooling yourselves.
““How do they make money on you?”
By charging every business a % for taking your card.”
Here we have the problem of the best interests of society versus the best interests of the individual. Most credit cards give you 1%-2% back overall for purchases (either as car rebate up front, miles, or straight cash back for example). For this reason it makes sense to use a credit card for every conceivable purchase since everyone else is doing it. Obviously the merchants are including their fee inside the product which you are buying so you are really not gaining anything and only the credit card company is the winner (they are like the casino - they win even if you pay off each month because many do not).
I think credit card companies are vultures, but I am afraid our Congress is going to bail them out just like the banks over mortgage loans. Sending the wrong message to just keep the Ponzi scheme alive.
Last year I took over my grandmother’s finances. She has $60,000 in credit card debt and no conceivable way to pay it (she is in Title 19 in a nursing home). In the end the credit card companies have little power, and I guess banks have lots of credit card debt that is uncollectable - like my grandmothers.