What Is a Deadbeat?
Deadbeat is a slang term for a credit card user who pays off their balance in full and on time every month, thus avoiding the need to pay off the interest that would have accrued on their accounts.
A deadbeat is also called a "nonrevolver" or a "transactor." They'll get this derogatory name by being a potentially less profitable customer for a credit card company than a revolver, or someone who carries a balance from month to month.
How Deadbeat Works
By not carrying a balance, a deadbeat does notincur any interest charges, and by paying on time, they don'tincur any late fees.
However, so-called deadbeats in the credit world also do not rack up bills they never pay, so they do not generate significant losses for credit card companies like real deadbeats, who do not pay their bills.
- Usually used as a derogatory term, a deadbeat in the credit card world is someone who pays off their balance in full every month.
- Deadbeats often reap the rewards from credit card programs without having to pay high fees or interest due to regular and full payments on theircards.
- Credit card companies make money from deadbeats (3% fees) that merchants pay on purchases.
- Deadbeats with credit cards do not generate significant losses for credit card companies.
Deadbeats Can Still Generate Revenue for Credit Card Companies
Why would a credit card company want a deadbeat as a customer if they do not earn interest or late fees from them?
Because credit card companies still earn money from deadbeats. One way they make money is that merchants pay about 3% of each credit card transaction in fees to the credit card company.
For example, suppose a deadbeat charges $2,000 on their card. Then, if they pay that balance in full and on time and do not allow the credit company to charge 10% to 30% in annual interest, the credit card company still earns money. How? Because the company makes $60 from the deadbeat customer via the 3% fees that the merchant pays on the $2,000 charges.
Credit card companies can also make money from nonrevolversby charging an annual fee for the privilege of using that card.
Special Considerations
Deadbeat customers usually feel as if they come out ahead by using a credit card over cash or a debit card. They use credit cards for the convenience and consumer protections they offer. They also use them for the grace period that lets them keep their cash in their bank accounts between the time they charge a purchase and the time the credit card bill is due.
This grace period is usually about three weeks. Another reason nonrevolvers or deadbeats like using credit cards are the awards programs. And because deadbeats do not carry a balance and do not pay any interest, a rewards card that offers 1% to 5% back on purchases means a deadbeat can make money from using a credit card.
FAQs
Being a credit card deadbeat simply means you pay off your full balance by the end of each statement period. With interest rates rising, not carrying a balance into the next period is particularly important.
What is the difference between a deadbeat and a revolver? ›
A deadbeat is also called a "nonrevolver" or a "transactor." They'll get this derogatory name by being a potentially less profitable customer for a credit card company than a revolver, or someone who carries a balance from month to month.
What is a deadbeat slang? ›
informal. a lazy or socially undesirable person. a person who makes a habit of avoiding or evading his or her responsibilities or debts.
What does deadbeat mean in economics? ›
A “deadbeat” is the unflattering term sometimes used in the credit card industry to describe consumers who pay off their balances every month, using the lenders' money but paying no interest on it.
What does it mean to be a deadbeat in reference to credit cards group of answer choices? ›
For them, "deadbeat" means someone who avoids interest and fees by paying her/his account balance in full each month rather than paying the minimum amount and carrying a balance.
Does credit card debt get forgiven? ›
Credit card companies rarely forgive your entire debt. But you might be able to settle the debt for less and get a portion forgiven. Most credit card companies won't provide forgiveness for all of your credit card debt. But they will occasionally accept a smaller amount to settle the balance due and forgive the rest.
What is deadbeat in finance terms? ›
A deadbeat is someone who owes money or has other financial obligations and doesn't meet them. Deadbeats don't pay their bills.
How much credit card debt does an average family have? ›
Based on data from the Federal Reserve Bank of New York and the U.S. Census Bureau (based on 2024 and 2023 data respectively), it can be calculated that each American household carries an average of around $8,674 in credit card debt in a year.
Why do they call it deadbeat? ›
deadbeat (n.) "worthless sponging idler," 1863, American English slang, perhaps originally Civil War slang, from dead (adj.) + beat.
What is a word for no pay? ›
unpaid (adjective as in free, voluntary) Weak matches. contributed donated due freewilled gratuitous honorary unindemnified unrewarded unsalaried volunteer. unpaid (adjective as in not settled; taken without remuneration)
Noun. ghostess (plural ghostesses) A female ghost.
What is the slang dead nuts? ›
“Dead nuts” is a machinist's term for absolute precision–the highest compliment for something that is being inspected for accuracy. Through the combination of extreme precision, invention, and design, the machinist is among the most exacting craftsmen.
What is considered a deadbeat? ›
They are also referred to as absentee fathers and mothers. The gender-specific deadbeat father and deadbeat mother are commonly used to refer to people who have parented a child and intentionally fail to pay child support ordered by a family law court or statutory agency such as the Child Maintenance Service.
Do credit card companies hate deadbeats? ›
Simply said, deadbeats can beat the credit card system. That's why they are not the preferred customer of the credit card company. They prefer customers who are willing to pay the minimum payment for the maximum amount of time at the highest interest rate they can tolerate.
What is a deadbeat dad? ›
deadbeat dad in American English
noun. a father who neglects his responsibilities as a parent, esp. one who does not pay child support to his estranged wife.
What is a deadbeat debtor? ›
: one who persistently fails to pay personal debts or expenses.
What is considered a deadbeat dad? ›
a father who neglects his responsibilities as a parent, especially one who does not pay child support: The deadbeat dad was forced to pay a lump sum of over $10,000 to settle the case.
