Contrary to the common perception of users paying off balances monthly ("transactors"), the majority—about 60%—are "revolvers" who carry debt. This group is the primary source of profit for card issuers, as they are subject to interest rates now averaging a staggering 23%.

The same banks issuing high-interest credit cards offer substantially cheaper personal lines of credit to customers with identical FICO scores. Despite being a logical tool for consolidating expensive card debt, these products receive almost no marketing, making them largely invisible to consumers.

The massive 100x return on investment for card issuers like Amex and Chase makes them insensitive to the card's cost. This dynamic protects Composecure's high margins and discourages issuers from switching to cheaper, lower-quality suppliers for their most valuable customers.

Robinhood users spend two hours a month in the app—5-10x more than users of banking or payment apps like Venmo. This high engagement creates a powerful, low-cost funnel for cross-selling new banking products like credit cards and savings accounts, giving it a key advantage over other fintechs attempting to expand their services.

Despite managing a financials fund, Derek Pilecki is bearish on the average bank. He argues that intensifying competition from online banks and giants like JP Morgan will continuously compress margins and lower returns over the long run, making passive bank investing a poor strategy.

While many assume high credit card rates cover default risk, actual charge-offs on revolving balances average only 5.75%. This is a significant cost but accounts for less than a third of the typical interest rate spread, indicating that other factors like risk premiums and operating costs are major drivers.

A surprisingly large portion of high credit card APRs covers operating expenses, particularly marketing. Issuers like Amex and Capital One spend billions annually on customer acquisition. This spending is passed directly to consumers, as higher marketing budgets correlate with higher chargeable rates.

Consumers are largely insensitive to the interest rates they are charged, rarely seeking out cheaper options like credit union cards. This behavioral pattern means that cutting rates is an ineffective customer acquisition strategy. Instead, issuers invest heavily in marketing, which proves more effective at attracting new borrowers.

Affirm's CEO argues the core flaw of credit cards is not high APRs, but a business model that profits from consumer mistakes. Lenders are incentivized by compounding interest and late fees, meaning they benefit when customers take longer to pay and stumble.