year. Thus, Americans pay tens of billions of dollars every year in interest on their credit cards—plus basic fees

for the credit card or fees for late payments.

Figure 4.5 illustrates demand and supply in the financial market for credit cards. The horizontal axis of the

financial market shows the quantity of money loaned or borrowed in this market. The vertical or price axis

shows the rate of return, which in the case of credit card borrowing we can measure with an interest rate. Table

4.5 shows the quantity of financial capital that consumers demand at various interest rates and the quantity

that credit card firms (often banks) are willing to supply.

FIGURE 4.5 Demand and Supply for Borrowing Money with Credit Cards In this market for credit card borrowing,

the demand curve (D) for borrowing financial capital intersects the supply curve (S) for lending financial capital at
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