You don't get any rewards (1% is standard, plenty already give 2% back)?
You also need to take into account the bank's cost of funds, the cost of administering the account, the cost of fraud, cost of disputes (do you ever do a chargeback?)
I thought the cash equivalent of the rewards are charged to merchants ontop of the fee? Square etc shelter that from their merchants (which partially explains their losses quarter to quarter).
The marginal cost of servicing another person when they already have a consumer base of people with debt is very small (close to zero). I'm trying to say it's still profitable, but not where they make the bulk of the revenue.
Amex charges higher fees (many of their cards charge the consumer directly, and their merchant fees are higher) and don't charge interest on many cards (charge cards). Their business model is different.
You also need to take into account the bank's cost of funds, the cost of administering the account, the cost of fraud, cost of disputes (do you ever do a chargeback?)