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Credit cards are a widely accepted, convenient and reasonably secure alternative to debit cards, cash and other forms of payment. Features such as rewards, travel benefits and purchase protections make credit cards an even more appealing option for consumers. In addition, a credit card gives you a grace period, where you can use funds without paying interest.
Given all of this, it’s not surprising that credit card use is widespread. According to the Consumer Financial Protection Bureau, over 190 million Americans carried at least one credit card in 2023. And that translates to big business. In 2022, credit card transactions in the U.S. totaled an astounding 5.76 trillion dollars.
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What Are Credit Card Companies?
Credit card companies are the financial institutions and organizations that facilitate credit card transactions—credit unions, banks, payment networks and other financial institutions issuing credit to and facilitating card transactions for consumers and business owners. They can be split into two categories—credit card issuers and credit card networks.
What Is a Credit Card Issuer?
Credit card issuers are financial institutions that issue credit cards to consumers and businesses. Typically, banks and credit unions are card issuers.
Major bank card issuers include American Express, Bank of America, Barclays, Capital One, Chase, Citi, Discover and U.S. Bank, while PenFed Federal Credit Union and Navy Federal are two of the largest credit unions issuing credit cards. In total, there are 84 active card issuers in the U.S. as of 2023.
When you apply for a credit card, you submit your application to a credit card issuer. The issuer reviews your application, credit history, credit score and overall financial profile to determine if it will approve your credit card application and if so, the amount of credit it will extend to you and the applicable APR.
Your ongoing credit card relationship is managed by the card issuer who is responsible for sending out statements, collecting payment and reporting your payment history to credit bureaus. Ultimately, credit card issuers are lenders and take responsibility for the funding they loan to you through the credit card.
Credit card issuers develop credit card products with benefits they think will attract consumers. Co-branded credit cards are the result of partnerships between businesses and card companies that promote the use of the business’s product or service. Examples of co-branded credit cards include airline credit cards, hotel credit cards and store credit cards. The card issuer is still responsible for the overall issuance and management of the credit card in co-branded relationships.
What Is a Credit Card Network?
Credit card networks facilitate transactions. When you pay with a credit card, the funds must be relayed from the card issuer to the merchant. Credit card networks charge merchants a fee for the use of their network. The credit card network accessed for a transaction depends on the credit card used.
The four major credit card networks are American Express, Discover, Mastercard and Visa. American Express and Discover also issue their own credit cards. This differentiates them from Mastercard and Visa which are solely card networks.
Find the Best Credit Cards for 2024
No single credit card is the best option for every family, every purchase or every budget. We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.
Credit Card Companies
- American Express
- Bank of America
- Barclays
- Capital One
- Chase
- Citi
- Discover
- Synchrony
- U.S. Bank
- Wells Fargo
American Express
American Express operates the largest integrated payments platform in the world, both issuing cards and operating a credit card network. Amex’s customers include consumers, small businesses, midsized companies and global corporations.
American Express cards are not exclusively issued by American Express, but many of the best Amex cards are.
Bank of America
Bank of America provides banking and card services to about 69 million consumer and small business clients.
The company’s card offerings rank high on our list of the best student cards, but the company provides myriad credit card options for many types of consumers and businesses.
Barclays
Barclays offers global online services without physical branches. The issuer features credit card options for consumers and small businesses alike.
Barclays’ credit card portfolio includes such co-branded cards as the AAdvantage® Aviator® Red World Elite Mastercard®* and the JetBlue Card*. It also issues cards under its own brand, including the Barclaycard Platinum (only available in the U.K.).
Capital One
A relatively new bank founded in 1994, Capital One Financial Corporation started as a bank focused on credit card issuance. Since then, it has grown to be a major banking presence with both physical branches and an online presence. One of the largest issuers of Visa and Mastercard credit cards in the U.S., the company offers list-topping card options for consumers and businesses across several card categories.
Chase
JPMorgan Chase & Co. operates in over 60 countries, providing investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Chase’s credit cards are known as some of the most reward-focused, benefit-heavy travel cards on the market.
Citi
Citi has 200 years of experience in banking and financial asset management, operating in nearly 160 countries. Citi’s credit card offerings are renowned among credit card experts, especially for long introductory APR periods and strong rewards.
Discover
One of the largest digital banks in the United States, Discover both issues cards and acts as a card network. Worldwide acceptance of Discover cards continues to grow, with over 70 million merchants in more than 200 countries accepting Discover. Discover’s cards top several of our best-of lists for lucrative reward structures and other benefits.
Synchrony
Synchrony is a major issuer of store credit cards, with over 70 million active customer accounts. Examples of Synchrony partners include Amazon, Walgreens, PayPal and Lowe’s.
U.S. Bank
U.S. Bank operates more than 2,000 branches in 26 U.S. states. The bank offers financial products and services to individuals, businesses and major corporations including a variety of credit card options like the U.S. Bank Visa® Platinum Card*.
Wells Fargo
The third largest bank by assets, Wells Fargo claims to serve at least one in three U.S. households. As one of the most recognizable brands in consumer-focused finance, the bank offers several credit cards for consumers and businesses alike.
Credit Unions
A credit union is a member-owned, not-for-profit financial institution that offers services similar to a bank. That includes accepting deposits, making loans and other financial services.
Credit unions are administered by an elected volunteer board of directors. Any profits earned by a credit union are used toward keeping financial costs down for their members. That means reduced fees, higher savings rates or lower loan interest rates.
Members of a credit union share a common bond that defines the credit union’s field of membership. In order to join a credit union, you must fulfill the requirement of being within the field of membership. Those interested in being more eco-friendly or banking more sustainably might choose a credit union over a larger bank.
Examples of credit unions offering credit cards include:
- Alliant Credit Union
- Digital Federal Credit Union
- Navy Federal Credit Union
- PenFed Credit Union
Smaller Banks
Smaller banks or those with regional footprints also offer credit cards. Examples include:
- BBVA
- Fifth Third Bank
- Goldman Sachs
- HSBC
- Huntington Bank
- PNC Bank
How Do Credit Card Companies Make Money?
Credit card companies profit from credit card transactions, through various fees and interest charged on carried balances.
Merchant Fees
Every time you tap, insert, swipe or click with a credit card, a merchant fee is charged to the vendor for the convenience of accepting a credit card payment. This payment is usually rolled into the cost of the goods or services you purchase and ranges between 1% and 4%. Some vendors pass this charge on to consumers directly, for example, as a convenience fee. The merchant fee is divided between the credit card issuer and the credit card network.
Interest
If you don’t pay off your credit card balance in full each month, you will be charged interest. The interest rate applicable—often noted as an annual percentage rate (APR)—will have been determined when you were approved for the credit card. Interest is also charged on balance transfers and cash advances.
Because about half of actively used credit card accounts carry a balance, interest fees are a significant source of income for credit card issuers. To avoid interest charges, you should pay on time and in full every billing cycle.
Annual Fees
Credit card issuers often charge annual fees on cards offering rewards and benefits. Premium credit cards can carry high fees to match their high-end status. Annual fees may also be found on credit cards targeting consumers with bad or poor credit, reflecting the riskier nature of this market.
Other Fees and Charges
These include late fees, cash advance fees, balance transfer fees and foreign transaction fees.
How Do Credit Card Companies Determine Their APRs?
Sometimes when you apply for a credit card, you’ll see a range for the APR on the pricing page. For example, here’s a pricing page from a Citi credit card.
Unfortunately, at the time of application, you won’t know what the APR is because it’s determined when your credit card application is reviewed. The APR range here is significant, spanning 10%.
Credit card companies determine the APR based on how they assess the risk in extending credit to you. They take into consideration your income, total debt, credit score and payment history along with your application information. Lower interest rates are offered to cardholders with the highest credit scores, reflecting the lower risk those cardholders present.
Pro Tip
The Best Chase Credit Cards Of 2024
Find the best Chase credit card for your needs.
Bottom Line
Credit cards can be a valuable financial tool if managed responsibly. They make it easier to track your expenses while potentially earning lucrative rewards. Credit cards are also a source of funds if you have an emergency, although high interest rates make this kind of usage a last resort. Careful management of your credit card usage and payments can improve your credit history. Conversely, late or missed payments, or carrying a balance will have a quick, adverse effect on your credit health.
Frequently Asked Questions (FAQs)
When do credit card issuers report to credit bureaus?
Usually, credit card companies report to credit bureaus once a month at the end of the billing cycle, also known as the statement date. The length of the billing cycle varies between issuers, typically falling between 28 and 31 days. Credit card companies aren’t legally obligated to send reports to bureaus and in fact, may not report to all three bureaus. That explains why you may see different information when you check your credit score with each bureau, for example, the number of hard credit pulls and overall credit score.
How often do credit card companies sue for nonpayment?
According to the Consumer Financial Protection Bureau (CFPB), surveyed credit card issuers have resorted to litigation in anywhere from three percent to 25 percent of unpaid balance cases. Issuers are more likely to sue when balances are higher or when the issuer has assessed that the credit card holder in default has a higher ability to repay—for example, is employed and/or has assets. If the issuer believes that litigation is likely to result in recovering outstanding debt, it is more likely to sue.
How do credit card companies verify income?
Credit card companies are legally required to assess an applicant’s ability to make minimum periodic payments by using such information as income, assets and other obligations. When you apply for a credit card, you’ll be asked to state your income and may be asked for additional information such as bank accounts or whether you own or rent your residence.
It’s up to the issuer to verify this information. It is permitted to decide to approve a credit card application based on the information known at the time. If the issuer decides to check, income can be verified by requesting pay stubs, bank statements or tax documents.
Who regulates credit card companies?
The Consumer Financial Protection Bureau (CFPB), a federal agency, regulates the credit card industry as part of its jurisdiction overseeing consumer financial markets. It protects consumers from abusive and unfair practices and enforces regulations through the supervision of banks, lenders and non-bank entities such as credit reporting agencies and debt collection companies. If you have a complaint about your credit card, the CFPB is the agency to register your issue with for resolution.
How do I get my credit card issuer to lower my interest rate?
The first step to getting a lower interest rate is to improve your financial situation and hence, your credit score and history. Higher interest rates are an indication of the risk assessed by the credit card company in extending credit to you. To get a lower rate, your credit card issuer will need to see you as a lower-risk cardholder. Improve your credit score by paying off your credit card balances monthly, making payments on time and decreasing your overall debt. Once your financial profile has improved, requesting a lower interest rate is more likely to be successful.
