ECONOMY STUDIOA free card that pays you cash back sounds like a gift. It isn’t. The card system takes in hundreds of billions of dollars a year, and the money comes from three places: stores that accept cards, cardholders who carry a balance, and, through prices, everyone else.
Follow $100 tapped at a store
When you tap a Visa or Mastercard credit card for a $100 purchase, the store doesn’t get $100. On average it keeps about $97.64; the other $2.36 goes in fees1.
Most of that is the interchange fee, which the store’s bank pays to the bank that issued your card on every transaction2. Add it up across the country and US merchants paid $198.25 billion in card swipe fees in 2025, including $157.8 billion on credit cards, $118.8 billion of it on Visa and Mastercard credit cards alone3.
For a store, that is a cost of doing business, like rent. Like other costs, it tends to end up in prices, whether you pay by card or in cash.
The biggest earner: interest
Swipe fees are only part of the money. In 2024, cardholders were charged $160 billion in credit card interest, up from $105 billion in 20224. They also paid $31.3 billion in fees, with late fees the biggest at $17.0 billion5. Together, that is about $191 billion in one year6.
The price of borrowing on a card keeps climbing. The average APR on general purpose cards reached 25.2% in 2024, the highest since at least 2015, and new accounts averaged 27.5%, against 19.8% ten years earlier7.
At a 25.2% APR, $100 carried for a year costs about $25 in interest; the average balance of about $5,300 costs about $1,300 a year8,7.
Who carries a balance
About 50% of credit card accounts carried a balance from month to month in 20247, and about 15% of cardholders made only the minimum payment, the highest share since at least 20157. Across the country, credit card balances stood at $1.26 trillion in the second quarter of 20269.
Zero percent offers keep people borrowing too. Cards with a zero percent introductory rate carried $899 billion in purchases and $352 billion in balances by the end of 2024, about one-third of the total7.
So who pays for the rewards?
Cash back is now the most common general purpose card, up from 28% to 36% of accounts over ten years7. The rewards have to come from somewhere. A Federal Reserve Board working paper estimates that credit card rewards move about $15 billion a year from less financially sophisticated consumers to more sophisticated ones, and from poorer areas to richer ones10.
In plain terms: people who pay in full and collect rewards are partly funded by people who carry balances and pay interest, and by everyone who pays card fees built into store prices.
What about Visa?
Visa doesn’t lend you money or issue your card; banks do. Visa runs the network and earns fees for moving the payment11. It is a remarkably profitable network: in fiscal 2025 Visa’s net revenue was $40.0 billion and its net income $20.1 billion, about half of revenue, on $14.2 trillion of payments volume12.
