The Ugly Truth About Credit Cards


Transcript

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- Millions of Americans are being duped

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by the credit card industry,

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but today I'm going to give you the facts.

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(upbeat music)

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Okay, so I've being doing this
job for about a decade now,

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and one of the questions I always get is,

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"How do I live life
without a credit card?"

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And to me, that just shows
the power of how our culture

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has convinced us of the lie,
over decades and decades,

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that you have to have a credit card.

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I mean, think about it,

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60 years ago, rarely did
anyone have a credit card.

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And now, on average, people
carry around four credit cards!

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Yes! And a lot of people,
they sign up for them

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because they have them for emergencies,

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or it's better protected than cash.

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All the excuses—all the things.

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Now listen,

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on the flip side though,

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I'm seeing people,

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78% of people, living paycheck to paycheck.

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And a big reason of that

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is because of debt payments!

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So, something is not adding up.

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Something is not working.

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So, if you are tired of not
having enough money in the bank,

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or worrying about not having enough money

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to cover an emergency, I want to help you.

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But the thing about credit cards

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is that they might make you feel like

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you're temporarily not
living paycheck to paycheck.

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Maybe you don't even
know what it feels like

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to pay for groceries or
gas with your own money,

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because it goes on a credit card

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that you'll pay next month.

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But the truth about breaking the cycle

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of bad spending habits
and building wealth

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is that credit cards are hurting you!

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They are not helping you.

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So, today I'm going to
debunk all the reasons

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you think you need a credit card,

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and then we're going to break down

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the reality of the credit card
problem in our country today.

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And this is such a huge topic, you guys.

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The credit card topic—it's massive.

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So, in this episode we're going to focus

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on why you don't need a credit card.

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And next episode, we're going to talk about

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how to get out of credit card debt.

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So we've got a two-parter
coming up. Get ready.

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So in this episode we're
going to talk to a couple

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who bought a house without a credit score.

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Yeah, that's right!

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No FICO score.

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That's right. Because a lot of you think

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you need to get a credit
card to build your credit

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to buy a house.

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Well, we're going to
debunk that this episode.

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Yes, we are!

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All right. But in order to live your life

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with such a different
mindset—thinking like,

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"How can I live life
without a credit card?"

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you have to have a moment when you say,

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"You know what?

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I'm done.

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I've had it."

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There are literally millions
of people around the country

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who have had this moment.

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So I wanted to share a few of
those stories with you today.

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- The moment I decided to be debt-free,

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I was sitting at the car dealership,

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and I had just signed
to get a different car.

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And the monthly payment I saw on that,

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I was like, "I can't afford this.

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I don't want to have this payment."

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And so I had a little
breakdown at the car dealership.

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I couldn't afford where we were staying

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and I couldn't afford my car.

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There was a few months where we relied on

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like a food pantry, to get groceries.

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And I needed to change for my kids.

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And I really felt like
the stakes were high.

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I had to get this debt eliminated.

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Looking back, it was just,
God orchestrated everything.

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Little by little, I mean

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I was putting away like
$10 a week.

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It's really motivating just seeing money

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and getting it put in there.

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I feel beyond blessed.

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It's just like a burden
lifted off my shoulders,

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to be able to pay off that
debt and be debt-free.

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- When we first started dating,

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I would only have a card for "emergencies."

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And then I had an "emergency"
and swiped the card.

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And then, before I knew it,
then the card racked up.

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- I just got tired of
like always getting paid,

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putting money in my savings,

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pay my credit card, and
then I'm overdrafted.

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I'm like something's not working out here.

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- We were still scared at the beginning,

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to join bank accounts.

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It's so counterculture.

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So he was doing his plan,
and I was doing my plan,

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and it was going to take us twice as long

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to get out of debt.

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And so, we had to get on the same page.

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We had to.

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- When we, you know, did this together,

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how powerful was that what our
money is going to do together.

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- We were able, because
of the debt snowball,

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to pay off his entire credit card—

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$7,000 in one month.

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Gets me emotional actually.

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- It's a beautiful day, you know.

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- To know that everything
is actually good!

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That we're going to be able to have a baby

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and not be . . . Literally,
have financial peace!

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- I love seeing those
moments in people's lives.

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And for most people, to
do something radical,

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you have to have that moment in your life,

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where you said, "You know
what? I'm done. I've had it."

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Now if you're ready to have
your own "I've had it" moments,

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and you never want to
worry about money again,

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Financial Peace University

0:05:10.218,0:05:12.162
is what you need to do to get started.

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It has helped over 5 million people

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start winning with money.

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And I've put a little sneak
peek of the first lesson

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in the show notes, just for you.

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And when you begin this journey,

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you're going to have so
many people telling you that

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"It's just not possible
to live without debt,

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and especially without a credit card."

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Friends are going to tell you that.

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Family's going to tell you that.

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Commercials are going to tell you that.

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But, let me give you some
truth about credit cards.

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(piano music)

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There are currently 459
million credit cards

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in circulation today,

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and only 327 million
people living in America!

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That's like 132 million extra cards

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that are not assigned to a person,

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but they're floating around.

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But they are assigned to people,

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because the average person
carries four credit cards.

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68% of people who use
their credit card said

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they use it on things that they need.

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But the most common type of credit card

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are the ones they sell
you at retail stores!

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Yes!

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41% of people have
store-specific credit cards.

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And, last I checked, not
many "emergencies" can happen

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where J Crew swoops in and
solves your problems.

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Maybe a fashion emergency, but no other—

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no other emergency.

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Store credit cards, actually, you guys,

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they are the worst you can get.

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Their interest rates are nearly double

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of traditional credit cards.

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So let's just assume

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that you accumulate $1,000 of debt

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on a store credit card.

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This is actually way lower of a balance

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than the average American,

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but it's just a nice round number.

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I'm going to give you the
benefit of the doubt.

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And let's say you pay two
times the minimum payment,

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every month on your balance.

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For a store credit card
with a 25% interest rate,

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it's going to take you 27 months,

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and cost you $307 in interest

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to pay off that balance.

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So let's say you signed
up for that credit card

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when they said, "Would you like
to save 15% on your purchase today?"

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And you said, "Yes!"

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And let's assume that you spent
that whole thousand dollars

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we talked about earlier,

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when you signed up for
that store credit card,

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which is pretty unlikely—

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but let's just say you did.

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That 15% saves you $150.

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But you end up spending
$307 in interest!

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Guys, let it sink in.

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It's just math people.

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And then you look at
the facts of the profits

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from places like Macy's.

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Macy's credit cards make up
nearly 40% of their businesses.

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And stores like Kohl's and Macy's,

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they actually pay their employees

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for each credit card application they get.

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It doesn't even matter if
the application is approved,

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but the employees get a commission

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for just getting someone to
sign up for a credit card.

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And some stores even
threatened to take away hours

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from employees who are not signing up

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enough people for credit cards.

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It's a huge problem!

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And you guys,

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I know a lot of people who
sign up for credit cards

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with really good intentions.

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They do it for the points,

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because they think they
can pay it off every month.

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But it's just not the reality.

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Only 45% of people pay off

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their credit card balances every month.

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And there's 784 billion dollars

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in outstanding credit card debt out there.

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Half of Americans are not paying
off their credit card bill.

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So the bottom line is:

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Credit cards are not going
to help you build wealth—

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they're actually going to steal it.

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Because again, I said it earlier

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at the top of this episode, but it's true.

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So many people say, "Well,
I'm going to get a credit card

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to build my credit so
that I can buy a house."

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But you actually don't need a
credit score to buy a house.

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It is possible.

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So, up next I'm going to talk to a couple

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who bought a house without a credit score.

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So check out their story.

0:08:56.886,0:08:59.061
(car engine running)

0:08:59.061,0:09:01.445
(shuts door)

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Guys, let's be real—being
a parent is hard work.

0:09:05.682,0:09:07.462
Now that I have two daughters of my own,

0:09:07.462,0:09:09.845
it feels like the to-do list never ends.

0:09:09.845,0:09:11.479
And as every parent knows,

0:09:11.479,0:09:12.750
your priorities change,

0:09:12.750,0:09:14.343
and you have to make important decisions

0:09:14.343,0:09:15.851
for your child's future.

0:09:15.851,0:09:18.201
That's why term life insurance is a must

0:09:18.201,0:09:19.654
for every parent.

0:09:19.654,0:09:21.222
It's so easy to get.

0:09:21.222,0:09:22.749
And it's affordable.

0:09:22.749,0:09:24.049
What you're looking for

0:09:24.049,0:09:25.962
is 10 to 12 times your annual income

0:09:25.962,0:09:28.797
to make sure everyone in
your family is taken care of.

0:09:28.797,0:09:30.898
Winston and I use Zander Insurance.

0:09:30.898,0:09:32.136
They do all the work for you

0:09:32.136,0:09:34.150
to find the best prices and options.

0:09:34.150,0:09:37.337
So go to zander.com to get
started on a quote today,

0:09:37.337,0:09:41.920
because that's who we trust
to take care of our family.

0:09:43.632,0:09:46.215
(upbeat music)

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- When we got married,

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we had a combined total of
about $30,000 in debt.

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About a year and a half into our marriage,

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he got offered a job in Nashville.

0:10:01.999,0:10:03.642
Came here as a contractor.

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We knew we did not want to buy a house

0:10:05.280,0:10:07.081
when he was a contractor.

0:10:07.081,0:10:08.689
- See, I wanted to buy
a house. But she's like,

0:10:08.689,0:10:09.522
"No, let's just wait."

0:10:09.522,0:10:10.355
- Yeah.

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The sticker price on the
houses was quite shocking.

0:10:13.536,0:10:15.470
We had had some financial discussions

0:10:15.470,0:10:17.006
before we got married.

0:10:17.006,0:10:20.345
He knew how I felt about
debt and credit cards.

0:10:20.345,0:10:22.857
Financial Peace University was
just kind of the final thing

0:10:22.857,0:10:24.272
that brought him on board.

0:10:24.272,0:10:26.241
But Stephen was very skeptical.

0:10:26.241,0:10:27.988
- Very skeptical.

0:10:27.988,0:10:29.677
- He decided that he would try it

0:10:29.677,0:10:31.686
and just see if it worked—

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see if this crazy plan worked.

0:10:34.566,0:10:35.827
And it did!

0:10:35.827,0:10:37.633
- I knew that God would push us through,

0:10:37.633,0:10:38.466
regardless of what it was.

0:10:38.466,0:10:39.906
So I was like, "All right, let's try this."

0:10:39.906,0:10:42.185
- Shortly after the
birth of our first son,

0:10:42.185,0:10:44.575
we paid off our final debt

0:10:44.575,0:10:47.106
and became completely debt-free.

0:10:47.106,0:10:49.243
Then we decided it was, it was time.

0:10:49.243,0:10:50.600
We just knew it was time.

0:10:50.600,0:10:52.285
We had outgrown our house.

0:10:52.285,0:10:54.995
We lived in a 750 square foot duplex.

0:10:54.995,0:10:57.031
- I mean, I honestly didn't
think it was possible

0:10:57.031,0:10:58.366
to buy a house with no credit.

0:10:58.366,0:10:59.935
But by working through the steps,

0:10:59.935,0:11:01.392
it works out pretty well.

0:11:01.392,0:11:02.554
- It's part of the plan.

0:11:02.554,0:11:04.384
You know, Dave Ramsey has it in his book,

0:11:04.384,0:11:06.742
a step-by-step plan of how to do it.

0:11:06.742,0:11:07.575
It works!

0:11:09.510,0:11:11.709
- Thanks Amanda and Steven for being here

0:11:11.709,0:11:14.061
and sharing your story.
I really appreciate it.

0:11:14.061,0:11:14.894
- [Steven And Amanda] You're welcome.

0:11:14.894,0:11:15.872
- Yes. Okay, so

0:11:15.872,0:11:16.736
I want to know,

0:11:16.736,0:11:18.265
because we're talking
about manual underwriting,

0:11:18.265,0:11:20.660
because a lot of people
believe you have to be in debt

0:11:20.660,0:11:22.582
to get a great credit score to buy a house.

0:11:22.582,0:11:23.884
We know that that is not true.

0:11:23.884,0:11:26.613
So, you guys went through the
manual underwriting process

0:11:26.613,0:11:27.921
to buy a new home.

0:11:27.921,0:11:29.001
So tell me first and foremost,

0:11:29.001,0:11:31.293
what caused you to buy a new home?

0:11:31.293,0:11:33.265
Why did you go into
the home buying process?

0:11:33.265,0:11:34.780
- We were in a very small, tight space.

0:11:34.780,0:11:38.476
750 square feet with me,
her and two little boys.

0:11:38.476,0:11:39.437
- Oh yes?

0:11:39.437,0:11:40.977
- Yes, yes.

0:11:40.977,0:11:42.056
- A little bit of craziness.

0:11:42.056,0:11:42.889
- Yes!

0:11:42.889,0:11:43.722
- Some chaos.

0:11:43.722,0:11:45.696
So you guys wanted—
- Yes, way too close together.

0:11:45.696,0:11:46.529
- Yes, yes!

0:11:46.529,0:11:47.703
So you wanted to kind of upgrade,

0:11:47.703,0:11:48.724
get some more space.

0:11:48.724,0:11:51.971
So then you go through the
manual underwriting process.

0:11:51.971,0:11:54.930
So, tell me all about that,
from start to finish. Like,

0:11:54.930,0:11:55.855
what did you do?

0:11:55.855,0:11:56.934
Who did you contact?

0:11:56.934,0:11:57.816
How did it work?

0:11:57.816,0:12:00.904
- It was a bit of a process
to find a mortgage company

0:12:00.904,0:12:02.378
who would work with us.

0:12:02.378,0:12:03.586
- Yeah.

0:12:03.586,0:12:06.369
- The first two mortgage
companies I talked to,

0:12:06.369,0:12:09.881
they told me that they would work with us.

0:12:09.881,0:12:12.357
Because I was very up-front with them.

0:12:12.360,0:12:12.940
- Yeah.

0:12:12.940,0:12:14.600
- I told them, you
know, "We are debt-free.

0:12:14.608,0:12:16.336
We've been debt-free for three years.

0:12:16.336,0:12:18.323
We have a zero credit score—

0:12:18.323,0:12:19.239
no credit score.

0:12:19.239,0:12:21.464
You know, do you do manual underwriting?"

0:12:21.464,0:12:22.297
- Yeah.

0:12:22.297,0:12:23.343
- And they told me, "Yes!"

0:12:23.343,0:12:27.417
And they took my information
and ran my credit.

0:12:27.417,0:12:30.282
Of course, it was no credit score.

0:12:30.282,0:12:32.046
- Yes.
- And they called me and said,

0:12:32.046,0:12:35.297
"Oh well, you do in fact
have no credit score."

0:12:35.297,0:12:36.130
(laughs)

0:12:36.130,0:12:37.468
It was like, they don't believe me!

0:12:37.468,0:12:39.230
- "I'm not lying."

0:12:39.230,0:12:40.456
- Exactly.

0:12:40.456,0:12:41.559
- And when we see the emails, it's like,

0:12:41.559,0:12:43.150
"Well, yeah, we told you
this from the beginning,

0:12:43.150,0:12:44.807
so why would you even try to run it."

0:12:44.807,0:12:45.855
- Right.
- We've got nothing.

0:12:45.855,0:12:46.688
- Right, right.

0:12:46.688,0:12:49.681
- And one of them told me
to go finance furniture.

0:12:49.681,0:12:51.106
- Oh, interesting.

0:12:51.106,0:12:51.939
- Yes.

0:12:51.939,0:12:54.652
That if I was desperate
enough to buy a house,

0:12:54.652,0:12:57.195
you know, like that, then I would.

0:12:57.195,0:12:59.190
- That's what we'd have to.
- Yeah, have to do that—

0:12:59.190,0:13:00.023
go into debt.

0:13:00.023,0:13:00.856
Wow.

0:13:00.856,0:13:01.689
- Yes.
- Wow.

0:13:01.689,0:13:03.120
And you said, "Well, not us."

0:13:03.120,0:13:03.953
- Yes.

0:13:03.953,0:13:06.669
That was not an option.
- Not Amanda and Steven.

0:13:06.669,0:13:07.502
- That's right.
(laughs)

0:13:07.502,0:13:08.545
- The other one told me to

0:13:08.545,0:13:12.614
get a credit card, find something
that I order every month,

0:13:12.614,0:13:13.950
such as pet food.

0:13:13.950,0:13:14.783
- Yes.

0:13:14.783,0:13:15.616
- And just . . .

0:13:15.616,0:13:17.591
- Build up a credit score that way.

0:13:17.591,0:13:19.111
- Yes.
- But then it took three,

0:13:19.111,0:13:20.313
so your third one.

0:13:20.313,0:13:21.178
- Yeah.

0:13:21.178,0:13:22.598
And so I called Churchill.

0:13:22.598,0:13:23.431
- Yes.

0:13:23.431,0:13:25.547
- Because I knew that they
advertise with Dave Ramsey.

0:13:25.547,0:13:26.935
- I love it. So they worked with you.

0:13:26.935,0:13:29.089
- Yeah, so I called them
and they worked with us.

0:13:29.089,0:13:30.681
- Yes.
- It was a wonderful process.

0:13:30.681,0:13:32.579
- I think that's such
a great point because

0:13:32.579,0:13:34.245
on the show, we're talking about—

0:13:34.245,0:13:35.625
sometimes living without debt,

0:13:35.625,0:13:37.581
there's some inconveniences, right?

0:13:37.581,0:13:39.679
Like there's some things
like rental car companies,

0:13:39.679,0:13:41.320
not all of them will rent you a car

0:13:41.320,0:13:42.497
if you don't have a credit card.

0:13:42.497,0:13:44.172
Some of them will, if
you have a debit card.

0:13:44.172,0:13:46.331
So there's just things you
have to kind of work around,

0:13:46.331,0:13:48.385
and this possibly being one of them.

0:13:48.385,0:13:49.218
And to do manual underwriting,

0:13:49.218,0:13:50.518
it takes a little bit more effort.

0:13:50.518,0:13:51.854
It's not the shoo-in, of like,

0:13:51.854,0:13:53.541
"Oh yeah, here's my great credit score

0:13:53.541,0:13:55.068
and anyone will take me."

0:13:55.068,0:13:56.156
- Yes.
- No, some of them

0:13:56.156,0:13:58.536
may not understand, and
so it takes some calls

0:13:58.536,0:13:59.923
and a little bit of the inconvenience.

0:13:59.923,0:14:03.115
But, how worth the inconvenience
versus having to pay—

0:14:03.115,0:14:04.712
you pay for furniture, right?

0:14:04.712,0:14:06.193
That you went and got into debt for

0:14:06.193,0:14:07.388
for this new house.

0:14:07.388,0:14:08.808
So like, I think it's a great example

0:14:08.808,0:14:10.511
that it is still possible.

0:14:10.511,0:14:11.344
It is.

0:14:11.344,0:14:12.177
So great.

0:14:12.177,0:14:13.010
- Yes, ma'am.

0:14:13.010,0:14:14.825
- Okay, so all this whole
process for you all.

0:14:14.825,0:14:15.997
You got out of debt,

0:14:15.997,0:14:17.546
you know, you worked through the plan.

0:14:17.546,0:14:18.379
I want to know like,

0:14:18.379,0:14:19.599
did your friends and family know

0:14:19.599,0:14:21.189
you guys were doing all of this?

0:14:21.189,0:14:22.861
- They didn't. They thought we were crazy.

0:14:22.861,0:14:23.912
They're like, "That's not going to happen."

0:14:23.912,0:14:25.348
- Seriously?

0:14:25.348,0:14:26.181
- Definitely.

0:14:26.181,0:14:28.861
- Yes, so you had some naysayers
say that it's not possible.

0:14:28.861,0:14:30.045
- There were always naysayers.

0:14:30.045,0:14:31.344
- Absolutely, absolutely.

0:14:31.344,0:14:34.433
And so, looking back now over your story,

0:14:34.433,0:14:37.045
would you say this whole
journey has been worth it?

0:14:37.045,0:14:37.878
- Oh yes.

0:14:37.878,0:14:38.944
- That is getting out of debt,

0:14:38.944,0:14:39.826
doing the manual underwriting—

0:14:39.826,0:14:41.533
like where are you sit today,

0:14:41.533,0:14:42.366
is it worth it?

0:14:42.366,0:14:43.378
- Yes.
- Definitely.

0:14:43.378,0:14:44.393
- It is worth it.

0:14:44.393,0:14:45.809
It's always worth it.

0:14:45.809,0:14:47.477
- Do it and then continue to pursue.

0:14:47.477,0:14:50.988
- Yeah, and kind of like
my husband was at first,

0:14:50.988,0:14:52.940
just try it.

0:14:52.940,0:14:55.024
And I promise it'll work for you.

0:14:55.024,0:14:57.166
- Yes. So you weren't the
one fully on board then.

0:14:57.166,0:14:58.333
- Oh I wasn't, no. She was.

0:14:58.333,0:14:59.166
- Okay!

0:14:59.166,0:14:59.999
So tell me about that.

0:14:59.999,0:15:00.832
How'd you get on board?

0:15:00.832,0:15:02.534
- She convinced me. She was just like,

0:15:02.534,0:15:03.754
"Hey let's try this."

0:15:03.754,0:15:06.611
And I was like, "I don't
think it's—I don't think so."

0:15:06.611,0:15:08.576
But I was like, "Okay, we're going to try it."

0:15:08.576,0:15:09.687
And it's like if it fails,

0:15:09.687,0:15:11.858
I can always fall back on this one.

0:15:11.858,0:15:13.309
- Sure.
- Okay, sounds good to us,

0:15:13.309,0:15:14.360
and that's what we did.

0:15:14.360,0:15:15.193
- Yes.

0:15:15.193,0:15:17.216
So what made you think that
maybe it wouldn't work?

0:15:17.216,0:15:18.865
Getting out of debt and
living a debt-free life.

0:15:18.865,0:15:20.368
- It sounds like it
was a crazy idea.

0:15:20.368,0:15:21.201
- Yeah.

0:15:21.201,0:15:22.467
- The way that everybody
pushes everything,

0:15:22.467,0:15:23.497
is like, "Hey, you have to have this

0:15:23.497,0:15:24.507
and you have to have that.

0:15:24.507,0:15:25.941
And you have to have a good credit score

0:15:25.941,0:15:26.962
to get everything."

0:15:26.962,0:15:27.959
And you don't.

0:15:27.959,0:15:30.550
- Yeah. So great. So good.

0:15:30.550,0:15:32.210
Well, you guys are awesome.

0:15:32.210,0:15:34.428
You worked the plan. You're a living testimony

0:15:34.428,0:15:36.790
to the fact that you can
live life without debt,

0:15:36.790,0:15:39.153
without credit cards.
Still get a mortgage,

0:15:39.153,0:15:40.423
because it's the one type of debt

0:15:40.423,0:15:41.434
we won't yell at you for.

0:15:41.434,0:15:42.267
Remember that.

0:15:42.267,0:15:43.408
And you can do all of that,

0:15:43.408,0:15:45.362
again, living debt-free.

0:15:45.362,0:15:46.822
So, that's awesome guys.

0:15:46.822,0:15:49.237
Thank you so, so much for coming
on and sharing your story.

0:15:49.237,0:15:51.404
- Thank you for having us.

0:15:55.610,0:15:58.075
- We love finding new ways to save money.

0:15:58.075,0:15:59.655
We lower categories in our budget,

0:15:59.655,0:16:02.849
buy things on sale, and even use coupons.

0:16:02.849,0:16:06.106
But we often forget about
the biggest expense we have,

0:16:06.106,0:16:08.810
and I'm talking about your mortgage.

0:16:08.810,0:16:10.146
If you have been in your home for a while,

0:16:10.146,0:16:13.188
there may be options available
that can save you money—

0:16:13.188,0:16:16.402
not just pocket change, but real money!

0:16:16.402,0:16:19.005
The best way to get started
and see what options you have

0:16:19.005,0:16:22.075
is by the Churchill Checkup
by Churchill Mortgage.

0:16:22.075,0:16:24.788
A quick call with an expert
home loan specialist,

0:16:24.788,0:16:27.017
can help you figure
out what's best for you

0:16:27.017,0:16:29.102
and discover incredible opportunities

0:16:29.102,0:16:31.040
to save time and money.

0:16:31.040,0:16:32.591
To get your Churchill Checkup,

0:16:32.591,0:16:37.341
go to
churchillmortgage.com/churchill-checkup.

0:16:41.820,0:16:42.764
See, you guys?

0:16:42.764,0:16:47.071
It is possible, and I
believe you can do it too.

0:16:47.071,0:16:49.496
Just have to believe
in yourself sometimes.

0:16:49.496,0:16:51.354
Coach Rachel, coming up.

0:16:51.354,0:16:52.231
All right.

0:16:52.231,0:16:55.425
Now, here are some reasons
that a lot of people think

0:16:55.425,0:16:56.590
that they need a credit card,

0:16:56.590,0:16:59.407
and what entices them to
sign up for the credit card.

0:16:59.407,0:17:03.174
But, I want to debunk some
of these perks for you.

0:17:03.174,0:17:04.631
All right, travel perks.

0:17:04.631,0:17:06.645
This is a huge one right now.

0:17:06.645,0:17:07.563
It's really popular.

0:17:07.563,0:17:09.384
Even, earlier this year,
a particular airline

0:17:09.384,0:17:13.065
offered free flights for
the companion of your choice

0:17:13.065,0:17:16.489
to accompany you on any
flight that you book,

0:17:16.489,0:17:18.196
if you sign up with your credit card.

0:17:18.196,0:17:19.798
But listen, the terms were

0:17:19.798,0:17:24.305
that you had to spend $4,000
within three months.

0:17:24.305,0:17:26.052
So by the time everything was totaled up,

0:17:26.052,0:17:27.880
processed, and added to your account,

0:17:27.880,0:17:31.868
you were rushed to spend $4,000
for half of the year

0:17:31.868,0:17:34.381
to get a buy one get one free flight.

0:17:34.381,0:17:37.255
But the average price of a
ticket was $151,

0:17:37.255,0:17:41.192
which means you would've
had to take 27 flights

0:17:41.192,0:17:43.868
by the end of the year to break even.

0:17:43.868,0:17:45.831
Now if you have the T-I-M-E to do that,

0:17:45.831,0:17:47.251
I'll switch with you.

0:17:47.251,0:17:49.834
Who has—no one's got time for that.

0:17:49.834,0:17:54.501
And in fact, there are
20 trillion unused airline miles.

0:17:55.957,0:17:57.395
Now the reward points.

0:17:57.395,0:17:58.428
"But I get points!"

0:17:58.428,0:18:00.512
Okay, this is another
one I hear all the time,

0:18:00.512,0:18:03.054
because they think credit
cards are helping them out.

0:18:03.054,0:18:05.836
But you guys, 31% of people
don't even use their points.

0:18:05.836,0:18:08.847
And when you do, you still
have to pay taxes and fees

0:18:08.847,0:18:10.289
on your purchase.

0:18:10.289,0:18:13.201
So all of a sudden that "free"
purchase isn't free anymore.

0:18:13.201,0:18:15.008
Another one is cash back.

0:18:15.008,0:18:18.856
All right guys, this is
just not a very smart one.

0:18:18.856,0:18:20.202
Let's just look at the math.

0:18:20.202,0:18:23.135
You get 1% cash back, which
is what most cards offer.

0:18:23.135,0:18:25.711
When you spend $300
on your credit card,

0:18:25.711,0:18:27.961
you get $3 back.

0:18:30.513,0:18:32.350
Okay, not a great deal.

0:18:32.350,0:18:34.963
Especially since studies
show that people spend

0:18:34.963,0:18:38.265
up to 100% more using a card versus cash.

0:18:38.265,0:18:39.339
It's not really cash back,

0:18:39.339,0:18:40.772
because it would be cash

0:18:40.772,0:18:41.834
that you wouldn't be spending

0:18:41.834,0:18:43.814
if you didn't have a credit card!

0:18:43.814,0:18:45.352
We've got to think people. We've got to think.

0:18:45.352,0:18:46.554
All right, fraud protection.

0:18:46.554,0:18:47.691
Never understood this one.

0:18:47.691,0:18:48.951
If you'd do some research, then you'd know

0:18:48.951,0:18:52.740
a debit card is just as
safe as a credit card.

0:18:52.740,0:18:53.872
I promise.

0:18:53.872,0:18:57.183
Also up is the build your credit myth.

0:18:57.183,0:18:58.957
All right, this is a huge lie

0:18:58.957,0:19:01.657
that we have believed
for decades and decades.

0:19:01.657,0:19:04.827
People are worshiping at the
idea of their credit score.

0:19:04.827,0:19:08.380
Okay, your credit score is
not an indicator of wealth.

0:19:08.380,0:19:11.277
You literally could
inherit a million dollars,

0:19:11.277,0:19:12.244
like right this second,

0:19:12.244,0:19:14.994
from Aunt Ira in Idaho,

0:19:14.994,0:19:18.744
and your credit score wouldn't
change one point, okay?

0:19:18.744,0:19:20.996
So it's not an indication that
you're winning with money.

0:19:20.996,0:19:22.825
It's an "I love debt" score.

0:19:22.825,0:19:25.443
And your FICO score has
absolutely nothing to do

0:19:25.443,0:19:26.907
with how much money you have.

0:19:26.907,0:19:28.497
No. So do not open up a credit card

0:19:28.497,0:19:30.401
to help you build your credit,

0:19:30.401,0:19:32.009
because the main reason
you have a credit score

0:19:32.009,0:19:34.523
is to get you into more debt.

0:19:34.523,0:19:35.562
We've already talked about,

0:19:35.562,0:19:37.170
you can buy a house
without a credit score—

0:19:37.170,0:19:39.730
the one type of debt that
I'm not mad at you for.

0:19:39.730,0:19:40.622
Okay, but the FICO score,

0:19:40.622,0:19:42.466
the credit score, can
be really complicated.

0:19:42.466,0:19:44.461
So I've put a link in the show notes

0:19:44.461,0:19:46.830
to tell you more about that
if you want to check it out.

0:19:46.830,0:19:48.745
Now, some of you might be thinking,

0:19:48.745,0:19:51.194
"But what about renting a
car, renting an apartment,

0:19:51.194,0:19:52.489
getting a hotel room?"

0:19:52.489,0:19:54.753
Listen, you can do all of
those things with a debit card.

0:19:54.753,0:19:57.910
Now, are there some
inconveniences with that?

0:19:57.910,0:19:59.943
Yes, there will be some
rental car companies

0:19:59.943,0:20:01.254
you cannot rent from,

0:20:01.254,0:20:02.977
but there are rental car companies

0:20:02.977,0:20:04.460
that will rent it for you, okay?

0:20:04.460,0:20:06.113
So there are some inconveniences.

0:20:06.113,0:20:08.532
But if you think about
it, conveniences in life—

0:20:08.532,0:20:09.667
just making it convenient

0:20:09.667,0:20:12.488
ends up costing you more in the long run.

0:20:12.488,0:20:14.321
Think about fast food.

0:20:16.402,0:20:17.933
Would love me some fast food right now.

0:20:17.933,0:20:19.248
But is it convenient?

0:20:19.248,0:20:20.362
Yeah, it's really convenient.

0:20:20.362,0:20:22.469
But it's not the
best thing for you, right?

0:20:22.469,0:20:25.116
Convenience stores, they
always jack up the prices,

0:20:25.116,0:20:27.048
because it's just easy to run in and out.

0:20:27.048,0:20:28.418
It's always more expensive than going

0:20:28.418,0:20:29.706
to like a bigger store, right?

0:20:29.706,0:20:31.478
So conveniences
are going to cost you.

0:20:31.478,0:20:34.114
So, here's the deal about
credit card, you guys.

0:20:34.114,0:20:37.404
Do some people get all the points—

0:20:37.404,0:20:39.803
you flew to Europe for free,

0:20:39.803,0:20:41.405
you pay yours off every month . . .

0:20:41.405,0:20:43.697
Are there people like that, that do it?

0:20:43.697,0:20:44.853
Yeah, there are.

0:20:44.853,0:20:48.174
But the majority of people, like we
just explained this episode,

0:20:48.174,0:20:49.759
are not doing it.

0:20:49.759,0:20:51.621
So it's not worth it.

0:20:51.621,0:20:52.829
It's not worth it!

0:20:52.829,0:20:54.930
You play with snakes,
you're going to get bit.

0:20:54.930,0:20:55.763
I'm telling you,

0:20:55.763,0:20:58.710
spend your money.
Do not depend on the bank.

0:20:58.710,0:21:00.228
Don't play their little games.

0:21:00.228,0:21:01.299
You need to get out of debt.

0:21:01.299,0:21:02.286
You need an emergency fund.

0:21:02.286,0:21:03.119
And you need to start

0:21:03.119,0:21:05.153
building your retirement and investing—

0:21:05.153,0:21:07.137
that's how you're going
to win in the long run.

0:21:07.137,0:21:07.972
I'm telling you.

0:21:07.972,0:21:10.378
Now, I know this is so much information.

0:21:10.378,0:21:13.442
That's why I'm breaking
it down in two episodes.

0:21:13.442,0:21:16.653
So, everything that we
talked about in this episode,

0:21:16.653,0:21:18.545
that will be in the show notes.

0:21:18.545,0:21:20.255
So make sure to go and check that out.

0:21:20.255,0:21:23.204
And stay tuned for the next episode.

0:21:23.204,0:21:25.098
If you go and subscribe
right now to the channel,

0:21:25.098,0:21:26.777
you won't miss the next episode.

0:21:26.777,0:21:29.870
We're going to talk about
how to get out of debt

0:21:29.870,0:21:32.982
and how to live with no payments.

0:21:32.982,0:21:34.555
And be sure to check out my podcast

0:21:34.555,0:21:36.697
for more tips and bonus episodes.

0:21:36.697,0:21:40.237
All you have to do is search
for The Rachel Cruze Show.

0:21:40.237,0:21:42.115
What a great episode, you guys.

0:21:42.115,0:21:43.153
Thanks for watching.

0:21:43.153,0:21:43.986
And as always,

0:21:43.986,0:21:45.610
be sure to take control of your money

0:21:45.610,0:21:48.107
and create a life you love—

0:21:48.107,0:21:49.857
without credit cards.