Credit card issuers are different from payment processing networks like Visa and MasterCard. Networks authorize and process transactions, set the terms of transactions, and help facilitate payments among merchants, credit card issuers, and cardholders. American Express and Discover act as both credit card issuers and the payment processing networks for their credit cards. The top U.S. credit card issuers in 2020 were: The name of the bank or credit union that issues a credit card often is on the front of the card, along with the logo for the affiliated network, such as Visa or Mastercard. If the issuer is not on the front, it may be printed on the back of the credit card in small print. It’s important to know your credit card issuer. You may need to contact them if you:
Have trouble with your cardSuspect fraud on your accountNeed to ask questions about your account
How Credit Card Issuers Work
Credit card issuers decide who can qualify for their cards. They take into account a number of factors when deciding: the creditworthiness of the cardholder, how the card is used, and more. If you have a higher credit score, you will be able to access cards with lower rates or those offering rewards such as airline miles or cashback. Many credit card issuers have grace periods on purchases, which means that if you pay off your balance every month, you won’t be charged any interest. A rewards card actually can be a tool for discounts as long as you don’t carry a balance. Carrying a balance, though, can lead to interest charges that cancel out the value of any rewards you receive. For example, if you carry a $5,000 balance on a card with an annual percentage rate of 20%, your credit card issuer would charge you $83.33 in interest the first month. If you didn’t make your minimum payment, the next month’s interest charge would be higher, because it would be calculated based on the new, higher balance of $5,083.33. Even if you made a $100 payment, your new balance would still be $4983.33. The interest charged on that amount would be $83.05, less than $0.30 lower than the previous month.
Credit Card Issuer Fees
Whenever you carry a balance on your credit card, you pay interest to the credit card issuer. But even if you pay off your balance every month, your credit card issuer can still make money by charging you fees. Some common fees are:
Annual fees Late payment fees Balance transfer fees Foreign transaction fees
Your credit card agreement will list what fees you have to pay for certain transactions and how much those are. Some of them may be a flat dollar amount. Other fees could be a percentage of the purchase you make. Credit card issuers also charge a fee to merchants. Each time you swipe your card, the merchant has to pay a fee between 1% and 3% based on your transaction and the type of card you’re using. Most credit card issuers have to split the fee with the payment processing network.
