Why Credit Card Business at Banks Is Unprofitable
The current customer acquisition cost for credit cards is about 465 yuan (350 for approval, 100 for new-user benefits, and 15 for card production), which means the channel I recommended is already quite generous—it offers roughly 300 yuan in referral commissions. The payback period ranges from 3 to 10 years. An average cardholder generates about 230 yuan in gross profit annually, suggesting a break-even point of just over two years. However, new cardholders tend to spend more conservatively in their first year, so it usually takes a full year of nurturing before they become profitable. There are also many deal-hunting users ("wool-gathering" customers) who generate little revenue. That said, long-term cardholders have stable benefit costs, so when you crunch the numbers, the credit card business needs approximately 4 million approved cards—or 8 million if there are many deal-seekers—to achieve profitability. The actual net profit margin for credit cards sits at only about 1% to 3%.