MasterCard and other credit card companies do not obtain revenue and profits from interest rates and fees charged to cardholders. The company does not issue credit cards, extend credit to cardholders or set interest rates.

As an international franchisor, MasterCard earns an initial franchise fee when it signs up a bank or other financial institution, authorizing it to offer its branded cards. These financial institutions are MasterCard’s customers.

Most of MasterCard’s revenue comes from fees it obtains from the banks for processing transactions and handling other payment-related services, and from charges that vary according to the dollar volume of activity from its branded cards. The more Mexican consumers who use a MasterCard issued by a bank in Mexico, for example, the more money MasterCard collects from the bank.

Citicorp, for example, is a franchisee of MasterCard and issues Citi MasterCards to consumers, establishes credit limits, sets interest rates and fees, and collects money from cardholders related to purchases, cash advances, interest, penalties and so.

MasterCard also tracks international consumer behavior and buying trends and provides consulting and advisory services.

In Latin America and the Caribbean, MasterCard has issued 115 million cards with the MasterCard brand and 126 million debit cards with the Maestro brand.

During the fourth quarter of 2008, MasterCard cardholders in the region carried out 635 million cash and purchase transactions, excluding Maestro cards.

The economy is affecting everyone. As people loose their jobs or face paycuts or even loosing their home, everyone is being frugal these days.

The use of credit cards is so prevalent in our society that it is almost unthinkable to see a drop in their use. We ourselves use credit cards to pay for everything. Of course, we always pay off our bills each month. Even our spending has come down significantly as we face uncertain future in regards to our jobs and when the economy will recover significantly enough for us to be comfortable in upping our spending again.

Given this situation and general public’s fear of the future, it comes as no surprise that credit card use has dropped 8%. What is surprising is that it only dropped 8%. I guess some of it is offset by the fact that people have lost income and are using the credit cards as temporary income.

The average annual interest rates for most of the popular credit card types went up again for the fourth straight week.

This applies to all the popular types of credit cards like low-interest credit cards, balance transfer credit cards and cash back credit cards.

For low-interest credit cards, the average APR jumped up from 11.59% to 11.62%. Low Interest credit cards are offered to people with strong credit history.

For balance transfer credit cards, the average APR jumped from 13.12% to 13.15%. Balance transfer credit cards are usually used by people who are paying higher interest rates on credit balances and want to lower their monthly payments.

For cash back credit cards, the average APR jumped from 13.75% to 13.82%. Cash back credit cards are one of the most popular types of credit cards where the rewards are in from of a cash back.

Credit card companies can get away with much more than you’d think. A ”fixed-rate” credit account only means that it doesn’t fluctuate according to an index, such as the Federal Reserve’s prime rate. It does not guarantee that your interest rate will remain the same in perpetuity.

Generally, when your interest rate is hiked, you receive an ”opt-out” notice, which gives you a 15-day advance notice of the change and the option to close the account and pay off your balance at your old rate. However, the 15-day rule doesn’t apply if the rate hike is due to a delinquency.

Many consumers prefer to keep their cards after getting rate-jacked for fear that closing an old account, which adds longevity to credit history, may hurt their credit score. This may be true, to some extent, if you don’t have many other credit cards or just started using credit. However, paid, closed accounts stay on your credit report for up to 11 years, depending on the reporting bureau (Equifax, seven to 11 years; Experian, 10; TransUnion, five).

Our advice: If you feel that the credit card company is being unfair, close the account in protest. If you really need the extra credit line, apply for another card that will give you better terms.

The average interest rate for most credit cards went up last week. This applies to all the popular types of credit cards like low-interest credit cards, balance transfer credit cards and cash back credit cards.

For low-interest credit cards, the average APR jumped up from 11.43% to 11.52%. Low Interest credit cards are offered to people with strong credit history.

For balance transfer credit cards, the average APR jumped from 12.93% to 13.05%. Balance transfer credit cards are usually used by people who are paying higher interest rates on credit balances and want to lower their monthly payments.

For cash back credit cards, the average APR jumped from 13.64% to 13.67%. Cash back credit cards are one of the most popular types of credit cards where the rewards are in from of a cash back.