pcr makes some points on borrowing money;

What Ever Became of Usury?

Paul Craig Roberts

Banks with credit card businesses are currently charging an annual interest rate of 19.24 percent on purchases. If you use their card for cash advances, the interest rate you pay is 29.99 percent.  If I remember my medieval history, 30% is higher than the usury Jews charged that led to pogroms and is higher than the percentage of serf labor to which feudal lords had claim..

I got to wondering what percentage of banks’s profits came from credit card interest and bank fees.  In other words, does it pay banks to finance new investment in plant and equipment when they can get 20% or 30% from lending to hard pressed Americans living on their credit card?

I did a search, and there is not the information you would suspect.  I did learn that credit card companies make more money from interest on unpaid accounts than from transaction fees on purchases.  Interest charges on outstanding balances are paid by the card user.  Transaction fees on purchasers were formerly paid by merchants.  However, today many merchants have shifted these charges to their customers. When you use your credit card today, you, not the merchant, face the transaction charges.

I learned that although credit cards only account for 4.5% of banks’ total balance sheets, they generated 16.6% of banks’ interest income during 2010-2023..........more............