The Trap 80% of Americans Are Falling For
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- čas přidán 7. 09. 2024
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Cash back. Airline miles. Hotel credits. Have you ever wondered how credit card companies pay for all those rewards? I mean, someone’s paying for that “free” flight to Boise. But who? In today’s video, we’ll explore who pays for credit card rewards. Spoiler: You’re probably not going to feel good about it.
Preorder George Kamel’s new book, Breaking Free From Broke, and get more than $100 in FREE bonus items: store.ramseyso...
George Kamel is a personal finance expert and co-host of The Ramsey Show. Following Ramsey’s proven money plan, George went from negative net worth to a millionaire in under 10 years. His goal is to help people spend less, save more, and avoid money traps so they can live a life with more margin, options and freedom.
This channel will simplify complex money topics, bust money myths with actual facts, and debunk the stupid financial advice you're seeing in your social media feed. All with a healthy dose of pop culture, humor, and snark.
I did it! I cut up and closed my credit card and made a budget. Suddenly , I mean immediately, I was not buying things blindly. I am buying what I need and want and I still have money left over each month. I have my emergency savings fully funded and 2 sinking funds for future big purchases. I will never use a credit card again. I love being in control of my money.
It sounds like you don't know how to manage your money
Sounds like she’s well on her way to be a multi millionaire and you’re still broke
@@LindseyHarvell-vc4ez how am I Broke?
Back off folks ! She obviously does manage her money well, but also, no reason to assume her critic is otherwise, he/ she may just be ok with credit cards. Live and let live.
I don’t know how but you’ve managed to package an unbiased analysis that is more entertaining than the sensationalized segment of economic and financial news. Thank you for your efforts to be the signal and not the noise. I understand that the economy is currently in a downturn and that we must wait for things to get better
As hard as it may sound you can plan for the recession. If you are working, find extra work and get an Invest--advisor. Protect your deposits by having enough cash in short term fixed income. Then cut your expenses. Minimal insurance, cut utilities.
I think the current market might give opportunities to maximize profit within a short term, but in order to execute such strategy , you must be a skilled practitioner
Due to my demanding job, I lack the time to thoroughly assess my investments and analyze individual stocks. Consequently, for the past seven years, I have enlisted the services of a fiduciary who actively manages my portfolio to adapt to the current market conditions. This strategy has allowed me to navigate the financial landscape successfully, making informed decisions on when to buy and sell. Perhaps you should consider a similar approach.
Even if you have a humongous income you still need to draw up futuristic plans because anything can happen. One could lose one's job or whatever. Investment cannot be overemphasized. About your advisor, how does one reach pls
Finding financial advisors like Melissa Terri Swayne who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
I work part time serving at a local pub, and we actually give discounts to patrons who pay with cash. 😇
Likely the owner isn’t paying taxes on it.
Likely the owner is discounting the upcharge built into the price. The company I work for charges extra for card payments to offset the fee. @@pojack9979
Very unethical. Some business owners do that and pocket the money without reporting it to the IRS. That's the only reason discounts are being offered.
@@ScottSullivanTV Some don’t see it as unethical. They see it as preventing the government from stealing more of their money.
@@pojack9979 The government is not stealing your money. Typical liberal logic.
If no one paid interest on a credit card the perks would disappear. The message for everyone should be to never carry a balance.
If no one paid interest on a credit card this channel would disappear. It's hypocritical as the entire Ramsey company disappears once people pay their debt on time lol
Unfortunately, paying off the balance every month is not their message. And neither is supporting the big guy (card companies) that keep people poor, ruin their lives, and make trillions in profit. While the middle/lower class is dying from it
MasterVisa Cards are based on Daily interest not Yearly so once you use it interest kicks in until you Payoff the Balance.. ???
Use only in dire emergency like a car breakdown in a strange city. Pay it off when Bill comes.
People still spend more using a credit card then if paying cash or on a debit card. I know I do. It’s easier and less painful initially to slap the purchase on a credit card.
This is the definition of a moral high-horse. Nobody is exploiting low income families by using a rewards card, they are choosing not to pay their loans.
How is it my fault that someone else spend recklessly?
It's not!
Collect those points, fellow traveller. We didn't make them reckless.
I got $2,000.00 cash back in 2023. No interest. I'll take it.
People pulling the "It is the right thing to do" makes me think of when a vegan makes the moral superiority argument.
"I agree bro, it is morally superior," as I take another bite of my steak.😋
I stick to a budget, I specifically plan and set aside money for large purchases, I don't buy stupid stuff I would not have bought anyway, why not claw some money back from the banks?
But did you spend unnecessary items/goods/services just to rack up those cash back? If yes, then you're not winning.
Plot twist. Other people will pay interest on their credit card whether I use a credit card or not.
Exactly. I'm not, not using credit cards just because irresponsible people get preyed upon by credit card companies. I'm not responsible for anybody outside my family.
That’s like saying you should stop eating cookies because someone else gets fat because they eat cookies too.
This is really clever imagery, but it's not a proper metaphor that denotes the pernicious reality. "Eating cookies" in this case is supposed to be compared to "using a credit card." Instead, maybe it should be "you should stop eating cookies because it makes you healthier ONLY because others are fat."
To connect the metaphor, your healthiness depends on other people getting fat. Credit cards ONLY exist because of financially ill-informed individuals; certain individuals, in essence, thrive off the ignorance of others.
When I was broke I paid fees. Now that I'm not broke, I don't pay fees and get cash back. No guilt for my journey. 95% of my purchases when I was broke was not necessities
You said what George couldn't
Bingo
Did you even LISTEN to what he said in his video? I think not
Weve had our debit card hacked twice and never got the money back. So we closed the card. We've had the credit card hacked and the amount was taken off the bill and a new card was issued. Some things you just can't pay with cash and checks. We seek to not use the card except when necessary. Between a rock and a hard place.
Man, everyone on here get's so angry when Ramsey suggests getting rid of your rewards credit cards. I mean, everything on here is true and several studies show it. People just like to think they're getting something for free even if it means spending more. That's why many stores/apps are implementing rewards programs. "Oh, you spent $100 on Starbucks? Great! Here's a free latte. See you tomorrow!"
😂
The price increase comes form transaction fees which all cards have even debit. The rewards come off back of people that cant pay off a balance. this is not the same so we are misunderstanding some things.
I love you George. You are literally my favorite Ramsey person ever. On this, though, that's a big ole' nah. When people choose not to pay for bad spending choices, that is not OUR fault.
I don't care who pays for my rewards. My choice to use a credit card is not going to have an impact on the financial well-being of poor U.S. households.
Scholars who study the stock market’s historical performance estimate that over time, the payment (and reinvestment, and compounding) of dividends have contributed anywhere from 30% to 90% of the S&P 500’s total returns. I want to spread across $400k into profit yielding dividend equities but unsure of which to get into.
Simply put, if you’re not investing in dividend stocks, you’re doing it wrong.I stopped listening and taking financial advise from these CZcamsrs, because at the end of the day, I end up with a bunch of confusing stocks without knowing when to take profit, In reality, all I needed was professional advice to take advantage and make profits.
Very much appreciate it Scholars who study the stock market’s historical performance estimate that over time, the payment (and reinvestment, and compounding) of dividends have contributed anywhere from 30% to 90% of the S&P 500’s total returns. I want to spread across $400k into profit yielding dividend equities but unsure of which to get into.
@@maryHenokNft Please can you leave the info of your investment advisor here? I’m in dire need for one.
@@maryHenokNft Please can you leave the info of your investment advisor here? I’m in dire need for one.
@@maryHenokNft Mind if I ask you recommend this particular professional you use their service? i have quite a lot of marketing problems.
I feel more secure buying online purchases with a credit card rather than though my personal checking. Anyone that has every had to deal with identity thief will understand this.
Yep
I have had it happen a couple times with a debit card, your protections are the EXACT same with a debit card and credit card, (from companies that offer both like visa and mastercard), sorry, but it's true, I report it, I go to my credit union, they make me a new card in 5 minutes, they refund my fraudulent charge, I carry on with life, and they investigate it over the next 30 days to make sure it's legit, obviously it has been each time. I don't own a credit card and never will, I buy everything with MY money. I also have identity theft protection from Zander insurance which covers basically all types of identity theft but also fraudulent debit or credit card charges if for some crazy reason my credit union thinks a fraudulent charge is something I actually purchased.
I see fraud every day. If you must have a card I feel you should have savings account named “credit card” and move the funds as soon as you spend them so the $$ is gone. Otherwise you think you still have the funds because for some reason nobody balances their account anymore.
My mom used to buy everything with her debit card. She has had the checking account emptied at least twice-and she kept using her debit card.
Same thing happened to me.. And within 15 min of the notification the money was back in my account.
So if I, a responsible credit card user, who get the cash back and rewards decide to stop using the cards, doesn't that mean the credit card company makes more profit since they don't have to share some of the profit with me? It doesn't exactly solve the problem.
Exactly! Capital One will happily take a larger profit margin from the 80% of people that are living with huge credit card debt. It's not like getting rid of the reward program will make them offer lower APRs
interesting point
You do know they do make money on every transactions you make with a credit card right ? They make way more on you spending with it then giving you your 25$ cash back buddy.
Sorry George, my cc is not for cash back or airline miles (I don't fly anymore) - it is for 'security' of my itty-bitty checking account balance. If an on-line purchase gets scammed - the credit card company deals with it while my life goes on; if my checking account gets scammed, my life comes to a screeching halt while I try to get my money back so I can pay my utility bills. I am starting to believe this is the same for 'auto-pays'! Just had an auto-pay company (health insurance) take out 40X what I had agreed to! Had that been on a CC, I could have handled it on the phone. Because it was my checking account I had to race to the bank (it made me 900 O/D) to stop the payment, have a stop payment fee and wait for 2 days to have the money back in my account - during which time my utilities had to go on 'hold' because of this o/d charge! Maybe some day I'll be as rich as you .... but until then .... nope - but then I have never had a cc company call my house and be rude to family members while I couldn't pay them (Like Dave did) - I just pay them off every month.
This is a powerful message. Credit card rewards (worth maybe 1%) are paid on the backs of the poor who are paying 20% interest.
I have had to have a card with a small 500 limit to rent cars for travel and book hotel rooms . Didn’t want to do that but couldn’t do otherwise
And no the debit card would not work for hotel and car rental
Great. You just learned how out of touch a lot of the ramsey team is.
@@eegernades no , I think it is a fine goal to not borrow money. The Ramsey team is far from out of touch , just found it difficult in my circumstance.
The seven baby steps have completely changed my view of money . I’m out of debt thanks to the Ramsey team and life couldn’t be better at the moment.
@@michealferrell1677 the u baby steps are fine for those illiterate about finance.
If you're beyond that, it's worthless.
And something like what the money guy team has is a lot more substantial beneficial.
@@eegernades you would recommend I go back in debt?
Fair points. But I have used credit cards for six years now without paying any interest and receiving some cash back. I understand the inequity of this system but there are many unequal systems out there. Also, with a credit card purchase I can dispute it before it comes out of my checking account.
That added layer of security is one of the main reasons I like to have at least one small-limit credit card. If someone steals my credit card info, they'll get only $1,000 at most out of me, and like you mentioned, you can contest it and the CC companies tend to be very helpful in instances of identity theft. Someone steals my debit card though? They get quite a bit more than $1,000 and the banks are tend to be less helpful in reversing charges. At least from what I've heard, it's never happened to me, thankfully.
It goes without saying though that no matter the reasons, living with a credit card is like owning a pet alligator... it's possible but takes a lot of care to not get bitten, and over-all George's advice is hard to argue against for most people's situations.
Yep true this, they blanket everyone assuming everyone had bad habits
"I'm not on a moral high horse..." said immediately after saying "You can choose to be part of the problem"... uhhh.... I believe that you believe these aren't contradictory statements.
I finally got one. ONLY because I was stranded traveling. I COULD NOT RENT A CAR because I was not coming back to that airport. I visited each car rental station. I also offered to pay for the ENTIRE car as a deposit….still no go. So a credit card sits in the back of my wallet until I need to rent a car that I’m not returning to the same airport with a plane ticket.
EXACTLY...Seems the Ramsy team still doesn't get it. And if you buy anything online and something goes wrong...where you want to do a stop payment because you still haven't received your product, or worse hackers and scammers...JUST TRY to ask the bank to help. They will say only one thing....Sorry. you're screwed.
💯
If you are on a moral high horse about this and not using rewards because of ethics then you have zero business shopping at places like Walmart or amazon or other companies that are questionable in their ethics.
It's not about being perfect. It's about doing your best.
Yeah I don’t feel bad at all. We use our credit cards for our business expenses and earn a crap load of flight points. We pay off the balance every month do it strictly to earn the points 😂
@@Jon-wj4xt right. And I think shopping at Walmart and Amazon is far worse for the poorer people than using a rewards card which charge the stores higher fees and this recoup most of their costs from the stores. Yes the stores then raise their prices to everyone a bit but because it's so spread out it doesn't have as much impact on the poorer people as they say. These poorer people are far less likely to qualify for these cards or any cards. So the Dr team is being a bit misleading
Hi George. I am ordering your new book, Jade’s new book and FPU digital card next week. You guys have changed my life. Much love from Ghana, West Africa.
the exact same thing is happening with banking fees for debit cards too. Overdrafts and fees for not having minimum balances are also moving from the poor to the rich.
I've heard this argument from John on the Ramsey Show - and it is just silly to me. The argument about spending more with a c/c over cash is far more valid than this one, George.
We simply can't be held responsible for other people's life decisions unless we are given some sort of control over their lives. And do we really want to want that? I know I don't.
According to John, every time you swipe your credit card a single woman gets pregnant. 🙃
@@tcgtpl Absolutely - and it's all my fault.
I think US and Canada CC's work differently ? I agree don't buy stuff just for the rewards, George and team is 100% correct, it's a scam. You get nothing free. However if you going to use a card, you may as well get something back even if it is little but only if you know how to use a CC (which most don't) and pay off your card every month (which most don't). Unless you a deadbeat (which is what CC companies call us who pay off our cards), you should not own or have a card.
I don't think it's much different. I'm dual citizen and I think if you can be responsible it's good to have a credit card in either country.
The
I only use my CC for SECURITY.
Pay your necessities with credit cards but stay on budget. Pay off your balance in full and accumulate the cash back & airline miles. You always have to eat, buy gas, pay utilities etc so why not be rewarded.
Because the rewards you reap are financed directly by people who are suffering in debt. You're contributing to an immoral system.
George explained EXACTY why. Watch the video again
@@user-ph6yh4hs9z You know banks will still charge stupid high interest to those who carry CC debt if the rest of us stopped using credit cards, right?
I have at least 5 friends who have had their Debit cards hacked and it took over a month to get their money back after the account was drained. That is the reason I use a credit card. I had fake charges put on my card 2 times and it was taken off with a phone call. I pay my card off every month.
What banks were these at? I’ve had multiple debit cards used fraudulently at Chase and they let you know immediately if fraud is suspected. They send out a new debit card next day mail and I never lost a cent.
There is more to these stories and the details are important. Perhaps your friends didn’t notice the fraudulent charges for many weeks?
@@Noah_527 BTW, Isn't Chase, a large credit card company, still collecting fees and Visa is still getting transaction fees coming from using their service with the debit card. Plus they have your bank funds and pay pretty much no interest on them so you are still funneling money to them and getting no kickback at all for the bank account or debit card usage at that point. Also debit cards have weaker fraud protection historically even though a lot of banks may not enforce their rights to hold you as accountable.
My issue with this "it hurts someone else" argument is that you could say that about anything related to finance. If I invest in mutual funds, chances are some of that money is going to companies that do unsavory things. Maybe even to a few credit card companies. But the Ramsey crew would never tell you not to invest in mutual funds.
Agreed. Did you also notice they choose the worse credit company “Capital One” to site from. Lookup Amex, they offer rewards mainly transaction fees. As usual Ramsey fails to understand one size does NOT FIT ALL!
... and? So what if my rewards from being responsible are being financed by others? That is how the world works. Everyone tries to get the lowest price when buying a house too. Is that taking advantage of those desperate to sell?
Yep. We bought our used pickup truck from a guy who was in financial trouble and had to get some money quickly. Got a great deal because he was in a hurry for some cash. Guess we profited from his mistakes. Not ashamed.
If you buy a used car, someone had to buy it new.
Yeah they try to do everything in their power to make you feel bad for being a RESPONSIBLE credit card holder. But this logic applies to a lot of things in capitalism.
George, I like your content. But this is only slightly missing information. Stuff you pay for in stores is marked up to make up for the cost of interchange fees. Companies dont like losing money and arent running a charity. So ultimately, consumers pay for those interchange fees through increased product/service pricing. Whether you use a credit or debit card, you are still paying for those fees.
Now, Im not saying this to make credit cards worth using. Just a functional problem with the system we live in.
In NJ, stores are allowed to charge a premium on payments made with CCards, but (supposedly) that premium has to be equal/less than the swipe/interchange fees they pay to their processor. I am suspicious when they charge 3.5% or more.
But then, I definitely pay cash.
In Canada, as a business, we are allowed to charge a service fee for using a CC, up to a certain percentage (based on which card issuer it is).
Our business pays the fees, but we don’t charge extra for offering CC purchases, as we don’t mind paying the fees for those folks, as they’re already losing so much money in life when compared to simply just paying for things in cash 🤷
We have gas stations that have two prices.
During mt entire 4 years of high school I was always told to never get a credit card, simply because it can cause more harm than good. I still refuse to get a credit card. My debit card and cash is all I'll use!!
No guilt here. I'm a New Yorker, so I pay a lot of city, state and federal taxes. At the end of the year we sent a bunch of money to charities. I use my card for the 30 float and get a few miles. Give me a discount and I'll use my debit card. Unfortunately, the only store that does that locally sells bourbon and cigars, and I'm trying to give those a break this year. And cash - I used to track it, now I just spend it.
What I’m not seeing in any of this is security. Meaning if your cc info gets picked up by somebody and there is fraud, the most you’re out is $50. But if your debit card that is linked to your bank account gets picked up and used for fraud, all your money in the account is at risk.
If you’re dealing online or even paying at the pump, it should be with a credit card…. Just treat it like a debit and pay it off every month.
Yes this is the reason I still use CC, this debit card has the same protection in the long run but for the up to 10 days to get your new card you will be up a creek if the debit card gets stolen in the short term.
George did a reel on the security protections. Linked above here
Been using a credit card for a long time now and reaping the rewards. The catch? There is none, I pay my balance off every single week and don't spend more than I earn. That isn't always easy but you have to discipline yourself and stick to your budget.
Nope I’ll keep using them. Have never paid a single cent of interest or late fee ever since my first card back in 2016. But the rewards sure did help cover most of my 4 day trip to Cancun last year!!!
I’m glad you got (almost) 4 whole days of value after 8 years of spending! I’ll stick with quarterly vacations tho, thanks
@@ParkourBrianor, he treated it like a cash budget instead of continuously spending like your uneducated assumption about credit cards.
It's not out of plausibility that he had the same amount of vacation as you, but one of those years was free where yours was paid.
@@ParkourBrianI go on two vacations per year solely from credit cards😅
This actually makes me feel better about using credit cards for the points. In a world where I'm fiscally responsible have to sit here watching the government pay people to stay at home during covid, give people money for college, and pay people who have kids out of wedlock just because they were irresponsible; it makes me feel good to finally get mine. It shouldn't feel so bad to actually do the correct thing. I get rewarded for doing the same thing George does, but I use a credit card and every now and then I realize when I grab a flight it's already paid for.
Turning down a bonus is a poor financial decision...
The Ramsy cult pushes a 1 size fits all solution for everybody, yet their proposed solution isn't how the founder of it got wealthy...🤔
No, they are not moving wealth from low income credit card users to wealthy credit card holders.
The banks are keeping the vast majority of all the interest/fees income, and only giving out meager scraps to the rewards programs.
Don't make the responsible financial people to be the bad guys here, its the banks and willfully ignorant people who donate all their money to them via a lifetime of interest payments.
Accountability...
The ones that need to stop supporting credit card companies are the people not paying on time.
Yes so my credit card stock will go up.
You can say almost every "break" we get also "hurts" someone else. When I paid little to nothing in mortgage interest, other people had to pay more, etc. Sorry, but I don't feel guilty about it.
I have been using 1.5% up 5% cash back credit cards for 20 year, and have never paid a dime of intrest charges, because I always pay off my balance every month.
I paid .95 to .98 1/2 for every cash dollar you spent for 2 decades.
That's the way its done.
Sorry George, I'm not willing to try this challenge. The constant use of credit cards by paying off the entire balance each month is working for me, rewards or no rewards.
Cool but I'm still using my credit card and paying on time.
Love the subtle Big Lebowski quote 2:58
Thank you for understanding. You are my people.
You could apply this to anything though. I wouldn’t stop shopping at a grocery store with low prices just because they sell lottery tickets which rob the poor. I didn’t cause these people to go into debt and not pay off their cards. They chose to do that.
Having cash rewards or airline miles doesn’t mean you wait around for the rewards to pay for vacation. You still have a budget. You still save up for things. Then when you get to actually enacting the plan, the credit card rewards are a discount.
We pay off our card each month, & appreciate the fraud protection that our credit card offers over debit cards or cash. I don’t see how my giving up credit cards will improve the financial behaviors of those who carry monthly balances.
Fraud protection from a credit card to a debit card it literally the EXACT same, read the fine print of the contract with Visa or Mastercard. Has to be companies that offer both debit and credit cards for apples to apples comparison. Plus on top of that everyone should have identity theft protection, which is another layer of protection even if for some crazy reason they say that something that happened wasn't fraud and that you yourself did buy, I've had my debit card compromised 4 times and I just go to my credit union, they make me a new card while I wait in the lobby and im on my way, they refund my money back within a day or 2, meanwhile they investigate it and let me know within 30 days what they conclude
Debit cards now give the same fraud protection as credit cards especially if you have a visa or Mastercard logo. Things have changed over the last few years
this is false. If someone takes money out of your bank account via your debit card you have to fight to get it put back and it may take a while. Credit cards are instant protection and usually they don't even ask questions about it when you report fraud.@@dreams2383
@@dreams2383 Yeah, no. "Fraud protection" can still takes months to resolve (read the fine print, please). I use my CC for on-line purchases (and an occasional local to keep the card active) - pay it off within a week and don't worry about some scammer/fraudster have access to my actual bank account. Due to BC/BS making a fraudulent 1400 'auto' withdrawal to my checking account (when it had been 35/month) - I am currently working to move all 'auto pays' to that credit card also - it has taken 4 days and a 'stop payment' fee to get my money back - which made my other bills late! But then, I don't have the huge bank accounts these Ramsey folks have.
Team no credit cards
To me, using a debit card and credit card basically feel the same: it is swiping. Using a credit card is fine as long as you keep to a budget. The most important thing is the budget. Credit cards also help with building credit and fraud protection. I don’t have a credit card because of the rewards so the premise is wrong.
Yeah, Dave always cites that study that says even if you don’t carry over a balance on a cc, you still spend more than if you used cash and/or debit. Literally impossible when you’re following a budget.
This isn't for people who are financially responsible. This is for people who are NOT and to control their spending. If you have no issues with finance management, great. You can move along
There are credit card people and there are people who are CLEARLY not credit card people. Dave's message is intended to reach as wide an audience as possible, so yes, telling the average American to avoid credit cards is a very wise thing.
Clearly, it's a tool. How you use the tool is on the individual person. I can say that after living without one for years, I don't miss it, though.
I mean… less rewards handed out means more money to the company they can use towards marketing to get more interest-paying customers right? 😉
Came here to say this!!
If I stop using my one credit card responsibly and earning cash back, that dollar amount going to the credit card companies at 4:07 will only increase. The $4.14 billion that people paid in fees also won’t decrease. This is one point I really disagree on. I’m also in that ‘household below $40k’ statistic, so I’m bucking the trends across the board. This video doesn’t jive with me.
How ramsey team is uneducated in the credit card aspect, but tall like they're experts when it's clear they are not.
I’m just here to say thanks for this video and to say…. FONGS IS AMAZING!! Thanks for shouting it out!
I have closed them except for one...I'll pay it off and close it Friday! Thanks, George!
Credit card is not only for perks and miles but it provides you with an essential safety net. Once you pay with cash or debit, that money is gone, good luck getting it back. With credit cards, I always can dispute the charges if the item is damaged or if I didn't receive the service. Credit cards also increase the warranty and some will even cover items that you lost after buying it. They also cover the insurance cost of rental cars. My rental car was hit by someone with no insurance and after filling some paperwork, I never heard from my rental car company and the repairs were completely paid for by my credit card. Seriously, I would be a mess without CC, but that's just me. All my CC payments are automated so I never have to worry about late fees or penalties.
Exactly, George is so wrong on this.
If us people that pay our balances an no interest stopped doing what we are doing, it is not going to change or help the people that use them irresponsibly. At that point the banks keep all the profit.
Yeah, I agree. I can't picture companies actually charging less interest even if we could wave a magic wand to make reward programs go away. They would just pocket the extra cash: and they sure won't listen to any moral reasoning on the subject.
I completely agree. Those of us that get the points and don't pay any fees and interest would actually do the credit card companies a favor not using their cards cause they make nothing off of us. It would put money in the bank's pocket cause they won't charge less interest and fees to the people that don't pay their cc off in time each month.
I've been in this challenge for over 2 years. I won't ever go back. George really breaks down the hidden costs behind credit card rewards, exposing the redistribution of wealth from lower to higher-income groups. It's eye-opening to see the impact on different demographics and how credit card companies profit. Have you considered trying George's no credit card challenge?
I hate how the Ramsey team uses this guilt tactic for credit card use.
It's not a guilt tactic when it's the truth.
@@andresprieto3323No, because George is lying in this video. The vast majority of the profits go the the banks, not the responsible rewards card holders.
@@joshmonus he was pretty clear on the banks (credit card companies) getting the lions share of the profits.
Oh cry me a river
with that logic, u shouldn't own an s&p 500 fund as each of the 500 companies probably did something u disagree with. this is what we call a slippery slope.
Sorry george i will still use my 2 credit cards. I don't even have a debit card. I use cash at my local stores i go to.
If my credit card company didn't give me any rewards, I'd still be using it. Having a credit card and working with a budget are not mutually exclusive. I know my monthly credit card bill is $2500 +/- $173 - and I budget $2700 for my credit card. The extra layer of security (despite what Dave Ramsey may say about debit cards), the ability to rent cars from cheaper rental places (like Budget, Sixt etc.) along with the rental insurance, warranties on purchases is what makes me use a credit card.
I agree with George though - if you're terrible with finances, don't have the financial discipline and are funding purchases with credit cards and paying interest, you need to cut it up ASAP. Fix your discipline issues first and then come to credit cards.
I remember going on a trip to Israel (I live in Poland) and sitting next to a lady who was going on a quite extensive trip with her miles (USA to Israel plus others) and I came home and told my husband that we really needed to change to a rewards card. I was feeling ripped off that we used the c/c but got no perks. So, we did. Since then we've paid for many trips with the miles. Our rewards card lets you buy whatever ticket you want including cut rate airlines, and then just use the miles to erase them. So, we've done that since then. I really feel more comfy about it since I feel like the c/c has my back - far more than a debit card. Since we are Americans living overseas, access to free cash doesn't exist. Any way we get money over here costs us something - and the actual cheapest way to spend money is not to bring it over at all - just use the c/c. (since our money's origin is the US and a US bank). Cash costs us something at the ATM.
Need to focus on using credit cards responsibly and taking that money back from the credit card companies
Debt No More in 2024!!!
It doesn't take all that much education to buy the groceries that were already going to get bought and pay the card off the next day collect a 1.5% discount and no interest.
Its not rocket science
Only 1.5% on groceries?
You need a new card!😉
It is not hard. Control your finances and get the benefit of the rewards. I do both, not hard.
Unfortunately you are wrong. You cannot opt out of this system unless you transact only with businesses that do NOT accept cards at all or offer a cash discount. The reason is the credit/debit card fees businesses pay to accept them are part of their p and l and anything on the p and l is part of their pricing strategy. This means, even if you pay your credit card in full, or use a debit, or even cold cash you are paying a premium on whatever you buy by at least the swipe fee the business is paying their processor. Who's paying for the rewards? You and I, every cent in the form of higher prices.
People who use credit cards aren’t chasing rewards. The thought process is if you are going to purchase something anyways, what is the harm in earning 2%-5% from that purchase. Also you aren’t evil for taking advantage of credit card rewards or for someone choosing to going into credit card debt and racking up interest and fees. That’s like saying Ramsey is an unethical company because they make a profit from lower income folks and people drowning in debt, which is unfair to say.
yep exactly. This is a horrible video and the premise is ridiculous.
To your first point, the psychology of it is that more money is usually spent with that thought in mind, and knowing our credit line is a lot more than whats on debit card. Some people can control that urge, but most aren’t even aware of it and spend more with CC.
@@nolantopey9246Ok, but I fail to understand why the people who use credit cards advantageously should feel guilty for earning rewards because others can’t manage their spending.
@@nolantopey9246 I argue this is also a problem with debit cards because with checkbook or cash you track it but with any type of plastic you don't.
I’m part of the problem, use my credit card like a debit card. I keep my balance and never go over.
Going on 14 months now without a credit card! It’s worth it!
Maybe for you, but not for everyone
Good for you man!
Being doing this for 4 yrs now...best decision ever , cut those credit cards up!!!
I combine the rewards with coupons to shave like 5%-10% off groceries and gas. I pay my cards in full monthly. Also my job has me travel frequently, but i have to buy the tickets, which i immedately reimbursed for. So theres no reason not to get free rewards on those tickets. Ive gotten lots of free stuff from normal gas, groceries, and tickets
I think credit cards are only great for very disciplined people who can stick to essential purchases and get a lot of cash back for free and get a clean 600-1000$ per year of free money, but most people are terrible with managing money to only 10-20% of people should have one
if you think only undisciplined and irresponsible people get into trouble with credit cards you are not paying attention to the real world. why would a credit card company simply give hundreds of dollars to millions of customers per year? there must be a reason
@@eatpigsnot give me some reasons then if you think I’m wrong and they give us cards cause they make billions on our backs that’s why
@@eatpigsnotif someone is getting into credit card debt without paying it off that month, they aren't a disciplined person.
So yea. The undisciplined are tbe only ones.
@@eegernades obviously you have not lived in the real world
@@eatpigsnot don't play that nonsense.
Would you say someone who gets into consumer debt, to be someone who is disciplined?
I appreciate this post, George Learned a lot. And no I don't want to be a part of this system.
Try to rent a car at Knoxville TN airport without a credit card.
The whole morality thing just doesn’t work. Simply because of the fact that George’s shirt was made by Chinese children who make $3 a day.
Credit card interest on anybody living in a first world country are the least of my concerns when it comes to morality.
That's quite the statement. Hope there some proof to it.
This is the only part that I deviate from the Ramsey philosophy, so I guess you can say I am Ramseyish. My good financial decisions have put in a place where I can use credit cards and benefit from some of the perks. The fact that others are not disciplined in their spending is not my issue. The entire world works on benefiting from others. We all work at a company that pays me but in turn benefits far more from my work then what I get compensated. It's a dog eat dog world unfortunately. I use credit cards and will continue to do so until it is no longer makes financial sense to do so for me, not because it doesn't work for others.
Yeah, me too. Wife and I pay off our balances every month . .. but acknowledge it's harder to stay on a budget when it's so easy to swipe.
Similarly, I am not paying down that 3% mortgage anytime soon --- BUT, we make sure we invest the difference in long-term savings.
@@yuckyool Same deal here. I capitized on 2.5% mortgage. I do pay additional every month, but I think it makes more sense to invest that additional money in the market.
Used points to pay for my flights and hotels this year. Thanks poor people. Couldn't have done it without you.
… Not that I am endorsing the use of credit cards, but me choosing not to use credit cards with rewards is not stopping other people from applying for credit cards with high interest rates, and being taken advantage of/making poor decisions with their money.
If we all stopped using credit cards with rewards, low income/poor credit applicants are still going to use credit cards and pay high interest. 🤷🏼♀️🤷🏼♀️
Just stop making credit card use a moral issue. It isn't & it is a bit self righteous. Someone drives a car made with batteries and parts sourced with cruel labor practices. Is that a moral issue?
Ramsey is great on basically everything… except this.
“Your cash back is hurting the poor!” is BS Ramsey invented to justify his zero CC stance.
Why not say, for example, you should get your cash back and then donate it to charity? Perhaps a charity focused on financial literacy?
This is what I do...donate my cash back. This past Christmas I applied the money back to adopt an additional family in need. Leaving money on table from responsible credit card use is stupid.
It’s just not their principal or legacy.
You need a credit card for online purchase. Never use a debit card.
Im going to spend the money anyway....why not receive a benefit for money i was going to spend...silly video. Only a good video for people who are irresponsible and pay interest.
I would opt out of cc if more businesses give you a discount (real price) on purchases.
If people used their cards responsibly and paid their balances in full every month then credit card companies wouldn't be able to make $16.58 billion on interest, but that’s never gonna happen.
In the 30 years I've had credit cards, I've never carried a balance and always got rewards. Its just discipline.
I have 18 Credit Cards. Notice me George! 😂
Stepping over dollars to pick up pennies is such a bar
This is one of those arguments that I in my opinion are ridiculous. About 50% of Americans of lowers earners do not pay 1 dime in Federal Taxes and get more benefits that does that pay. What is the difference.
Unfortunately, the solution to this issue is systemtic and would require regulation (no profit on card interchange, no reward cards allowed) and perhaps even the government stepping in to become the provider of financial inrerchange at cost, which would not only take us one step closer to the adoption of a CBDC, but is also something the Ramseys would never agree with.
or people taking personal responsibility for their actions.
@@aaronjjacques I would say buy a lottery ticket the day you can rely on that, but that would defeat the purpose
Orr you know let people make their own decisions. Why do we have to protect dumb people?
I used my debit card for years, then I found out after 7 years I no longer had any credit. If I ever did have to take out a loan I either wouldn't be approved or I'd end up hit with high interest rates. It made sense to me to get a couple cards and build my credit score back up, which it did pretty quickly. The cashback is a nice little bonus. I pay everything off each month just like I always have by using my debit card, which don't give no bonuses.
I would like to thank the people that are paying for my airline miles. The fact that some people are irresponsible with the credit cards is really, for the most part, none of my concern. Using emotions to sway people’s minds is weak.
The way reward programs work is the way it should be. People who make bad decisions or are irresponsible pay more because they make bad choices. In every other area of life being dumb gets you cash and prizes in the form of charity, welfare, etc. It’s nice to stick it back to them once in a while.
George underlines Dave's view that no one should have a credit card. If low income folks would follow that advice, they would not be paying the fees. I have credit cards, get the cash back and it's not my fault people pay fees- if they cant practice self discipline, IMO that's on them. ( and i havent paid interest on my cards for decades.)
Topic suggestion for future please: teens start earning a paycheck and have almost no bills... After you pay taxes and give some, how do you decide how much is ok to spend vs save?
And how do parents help guide those decisions?
Ramsey Solutions has always said invest 15%. On occasion they’ve mentioned that young folks just starting in the workforce should focus on investing in your education for a prospective career.
I hate this argument, it's so dumb. You want me to leave money on the table, because the company I do business with, has other customers who willingly accept the agreement and pay fees for using their service and that company give me some of the profit? Dumb argument, you could say this about any company or bank who makes money from fees. I guess I shouldn't pay cash for a new car, because car dealerships charge interest to other customers... Guess I shouldn't accept interest from my back, because they charge other customers over draft fees and loan interest to pay for it... See, I can play this game too. I never carry a balance, and I don't over spend, I guess I'm the only person in the world smart enough to "stick it too them"
George would probably get fired if he had a credit card. Or if he brings up 3-4% withdrawal rate again.
Man! Fongs pizza shout out! Well done sir
As an American, its funny how we have our own selective bias, depending on the subject. Nearly everything in our society operates on the principle of exploiting someone else
Still love the vids though 😁
I have Visa, Mastercard, etc as part of my index funds in my 401k so these poor people are paying for my retirement too.
I know. it's just like we have some Apple stock, so anyone buying inflated Apple products are helping us, too. :)
Its sorta like saying the police target poor people with speed traps. Sure the cops might be in those neighborhoods more often, but no one is forcing you to speed. Personal choice.
Also, how many callers have you had that make a great combined income and are still in a huge amount of debt? Its all personal choice.
Poor people can have a great credit score. Its not based on how much you spend. Its how you pay it back.