Painter you actually don't know what you are talking about. In the U.S.A. the average defaulted debt sells for something like 4% of face value. In Australia its something like 10 - 20%.
That means in the U.S.A. if for example you default on a credit card debt of $10,000 and its more than 6 months overdue and with accrued interest and penalties the debt climbs to for example $13,000 the bank will sell it for example for $520 (4%) to a debt collection company. So yes the bank does lose money. But yes, you would get hounded by debt collectors for a long time. Although for example if you hold out for a while and play hard ball you could end up settling for 40% of the face value of the debt with the debt collection company. For example let's say the $13,000 debt then becomes $15,000 by the time you have held off paying the debt collectors for a while you might be able to settle the $15,000 at say 40% which would be a payment of $6000 (therefore the profit the debt collection company makes on your account which they bought for $520 more than covers the many losses on all the dud debts they bought and couldn't get anything from). So you settled your debt which was originally $10,000 for $6000 and are $4000 better off, although you have destroyed your credit rating in the process for a measly $4000.
That is why credit card interest rates are so high. its to cover for the many deadbeats who default on their credit cards.
In Australia our credit card rewards are not that great. Unless you are a big baller spender or are using your credit card for business purposes the points/cash back you get will be worth very little, so better to just stick with a debit mastercard/visa card which has the same protections/returns policy/functionality of a credit card except for you cannot borrow on it. Also from what I've been told by mortgage brokers in the Australian system for someone with an already good credit rating/history owning a credit card will only reduce your borrowing capacity. In Australia for a guy like me who is an employee and a modest spender using a credit card would only get me a few hundred dollars worth of rewards points/cash back a year but it would reduced my borrowing capacity for mortgages, margin loans, etc plus it would be one more account/headache to manage therefore I do not own a credit card and just stick to using a debit-MasterCard for online purchases, etc
That means in the U.S.A. if for example you default on a credit card debt of $10,000 and its more than 6 months overdue and with accrued interest and penalties the debt climbs to for example $13,000 the bank will sell it for example for $520 (4%) to a debt collection company. So yes the bank does lose money. But yes, you would get hounded by debt collectors for a long time. Although for example if you hold out for a while and play hard ball you could end up settling for 40% of the face value of the debt with the debt collection company. For example let's say the $13,000 debt then becomes $15,000 by the time you have held off paying the debt collectors for a while you might be able to settle the $15,000 at say 40% which would be a payment of $6000 (therefore the profit the debt collection company makes on your account which they bought for $520 more than covers the many losses on all the dud debts they bought and couldn't get anything from). So you settled your debt which was originally $10,000 for $6000 and are $4000 better off, although you have destroyed your credit rating in the process for a measly $4000.
That is why credit card interest rates are so high. its to cover for the many deadbeats who default on their credit cards.
In Australia our credit card rewards are not that great. Unless you are a big baller spender or are using your credit card for business purposes the points/cash back you get will be worth very little, so better to just stick with a debit mastercard/visa card which has the same protections/returns policy/functionality of a credit card except for you cannot borrow on it. Also from what I've been told by mortgage brokers in the Australian system for someone with an already good credit rating/history owning a credit card will only reduce your borrowing capacity. In Australia for a guy like me who is an employee and a modest spender using a credit card would only get me a few hundred dollars worth of rewards points/cash back a year but it would reduced my borrowing capacity for mortgages, margin loans, etc plus it would be one more account/headache to manage therefore I do not own a credit card and just stick to using a debit-MasterCard for online purchases, etc