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1.5. Profits and losses

In recent times, credit card portfolios have been very profitable for banks, largely due to the booming economy of the late nineties. However, in the case of credit cards, such high returns go hand in hand with risk, since the business is essentially one of making unsecured (uncollateralized) loans, and thus dependent on borrowers not to default in large numbers.

1.5.1. Costs Interest expenses Operating costs Charge offs Rewards Fraud

1.5.2. Revenues Interchange fee Interest on outstanding balances Fees charged to customers


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