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Credit Card Confusion


What people call “credit card companies” are really just banks. The largest issuer of credit cards is Bank of America. JPMorgan Chase and Citigroup—2nd and 3rd largest issuers—are banks.

Using the label “credit card companies” creates a false distinction. There is not some shadowy, specially-evil class of corporations preying on poor little consumers. They’re the same companies that cash paychecks and pay interest on old-fashioned savings accounts.

Not all card issuers operate retail banks—you can’t deposit a pile of loose change at the local American Express office. Discover and Amex are just banks without storefronts.

Visa and MasterCard are not banks, and not credit card companies. They’re payment networks. Visa makes sure that gets its money when you make a purchase. That money comes from a bank, either deducted from your checking account or added to your debt.

I understand most people have no love for banks. “Credit card companies” are the same devil with a different name.