 TITLE: How Do Credit Card Companies Make Money? CONTENT: The Ways Credit Card Companies Profit From Cardholders\n------------------------------------------------------\nCredit card companies make money from cardholders in several ways: interest, annual fees and miscellaneous charges like late payment fees. Here is a breakdown of how each of those charges works:\n*   **Interest.** When you carry a balance on a credit card, you're typically charged interest in exchange for being able to borrow the money. Your interest rate—or annual percentage rate (APR), which combines interest and fees into one rate to help you understand what the card will cost you in a year—will vary by lender and is based on your creditworthiness. APRs on credit cards can get pretty high (15% to 30% or even higher), which is why you should pay your bill in full each month to avoid these expensive charges.\n*   **Annual fees.** Credit card issuers typically charge annual fees on rewards cards and on cards for bad credit. Depending on the card, annual fees can be pretty costly, especially for cards that offer top-tier rewards. The Platinum Card® from American Express, for example, charges an annual fee of $695—though annual fees this high are rare.\n*   **Miscellaneous charges.** This category includes several potential fees. For starters, the card issuer will charge you a late fee if you don't pay your bill on time. They may also charge you cash advance fees, balance transfer fees, foreign transaction fees for purchases you make outside the U.S., or over-limit fees when you spend beyond your credit limit. The fee amounts vary by issuer, but the good news is you may never have to pay these fees if you manage your card well. END