Your first credit card has arrived, with a network logo such as Visa or Mastercard. At a store, you tap it to pay $100. The payment goes through, and you'll pay the card bill later. Who just got paid, and when would this card cost you more than the $100?
A credit card purchase costs the store a fee split among your card issuer, the card network and the store's payment processor; issuers also earn interest and fees from cardholders.
Where does your $100 go when you tap your card?
Example: the store pays Stripe's standard in-person price for US cards, 2.7% + 5¢ per payment (Stripe, checked October 24, 2026). On your $100, the fee is $2.75 ($100 × 2.7% + $0.05), so the store keeps $97.25. Three parties split the $2.75:
| Who | Their part of the $2.75 |
|---|---|
| Your card issuer | interchange: $1.39 to $2.40 on a Visa card |
| The card network, such as Visa | network fees |
| The store's payment processor | what's left |
The issuer's part is Visa's interchange for in-store retail purchases on consumer credit cards. Visa sets it at 1.29% + 10¢ to 2.30% + 10¢ of the sale, depending on the card and the store (rates effective October 24, 2026).
Your reward is paid by your issuer. A 2% cash-back card, a common offer among larger bank issuers (CFPB), earns you $2.00 on this purchase. That can be more than the issuer's interchange from the sale, so issuers also pay for rewards from other income.
Who pays for your rewards?
Rewards are paid partly with the interest and fees cardholders pay, a 2023 Federal Reserve working paper notes. The CFPB adds that issuers may also use income such as annual fees.
Interest is the primary cost of credit cards, the CFPB says: $160 billion in 2024, plus $31.3 billion in fees. In 2024, about half of active card accounts carried a balance from one month to the next. The CFPB found that cardholders who carry a balance pay 94% of all card interest and fees but get less than 30% of the rewards.
Example: you put $500 of planned spending on a 2% card this month and earn $10 ($500 × 2%). If your card has a grace period and you started with no balance, paying the $500 statement balance by the due date means no interest on those purchases. The $10 is yours. In August 2026, bank credit card accounts that were charged interest averaged 22.36% (Federal Reserve, preliminary). Carry the $500 at that rate, and a month of interest is about $9.32 ($500 × 22.36% ÷ 12): almost all of your $10. While you carry a balance, new purchases are also charged interest from the day you make them (CFPB).
Rewards aren't a reason to spend more: 2% back on $200 you didn't need is $4.
Is a cash advance just another card purchase?
No. Cash from an ATM on a credit card is a cash advance: a short-term loan that can be expensive, the CFPB says. In a December 2024 review of agreements from seven top issuers, the CFPB found most charged a fee of $10 or 5% of the cash, whichever is greater. The most common cash advance APR (annual percentage rate) was 30%, and cash advance rates are usually higher than purchase rates. Interest generally starts on the day you take the cash, even if you pay your purchases in full every month. The CFPB's example: a $400 cash advance kept for a month at 30% costs $10 in interest plus a $20 fee.
What can I do today?
- If you have a card: find your issuer's name on the back of the card or on your statement; the name on the front may not be the issuer. Your statement shows your purchase APR and cash advance APR. Your card agreement (on the issuer's website, or ask the issuer for a copy) shows the cash advance fee and the annual fee. Write the four numbers down.
- If you don't have one yet: find the same four numbers in the rates and fees table of a card you're considering.
Can you pick the cheapest way to pay?
You owe a mechanic $200, and the shop takes cards. You can pay your statement in full by the due date. Which costs least?
- A. Take a $200 cash advance and pay the shop in cash
- B. Pay the shop with your credit card ✅
- C. Pay with your card, then pay only the minimum
Why: a purchase paid in full by the due date usually costs no interest; paying only the minimum leaves the rest to be charged interest, and a cash advance usually adds a fee and interest from day one.
Where do these facts come from?
- CFPB — The Consumer Credit Card Market (December 2025); Credit Card Rewards (May 2024) · Checked October 24, 2026
- CFPB — What is a grace period for a credit card? (last reviewed September 23, 2024); Can I withdraw money from my credit card at an ATM? (last reviewed September 2, 2026); Data Spotlight: Credit card cash advance fees spike after legalization of sports gambling (December 16, 2024) · Checked October 24, 2026
- CFPB — Credit card agreement database (no date on the page) · Checked October 24, 2026
- Federal Reserve — G.19 Consumer Credit (October 7, 2026); Who Pays For Your Rewards? Redistribution in the Credit Card Market (January 2023) · Checked October 24, 2026
- eCFR — Regulation Z, 12 CFR 1026.6: Account-opening disclosures (up to date as of October 22, 2026); Regulation Z, 12 CFR 1026.7: Periodic statement (up to date as of October 22, 2026); Regulation Z, 12 CFR 1026.60: Credit and charge card applications and solicitations (up to date as of October 22, 2026) · Checked October 24, 2026
- Visa — Visa USA Interchange Reimbursement Fees (October 24, 2026) · Checked October 24, 2026
- Stripe — Pricing & Fees (no date on the page) · Checked October 24, 2026