They definitely have a narrative that they are trying to shape. However, like Sebby, that doesn’t apply to me because I rarely carry a balance, and I use the cards to buy things that I could have very well paid cash for. And most often I don’t even wait until my statement comes before I pay it off.
I don't think it's a "narrative", but like you said they just are talking about it from the perspective of people who don't use credit cards correctly. People like us aren't the norm.
All comes down to one’s discipline. If you see a 30k limit and think you can just go buy 30k worth of stuff then these things aren’t for you. Essentially same concept for alcohol and gambling. Some people can do it in moderation and be fine with others ruin their lives with it
2:22 I literally mimicked the words as you were saying them. Yes. Premium card holders pay annual fees that offset by all kinds of credits and benefits, furthermore, these customers would pay more for those benefits out of pocket if not for the premium card.
Sebby thanks for pointing out that the Durbin amendment update didn’t result in retailers passing the savings on.. from my perspective that’s game over on the idea of capping interchange because if merchants don’t pass on the savings consumers end up hurt
I think one of the double edged swords of better education and financial literacy is that it's impossible for everyone to win. If more people are getting credit card rewards, then the average reward per person will be less. It's kind of interesting to think about that Sebby's spreading awareness of this stuff will eventually reduce the amount of rewards he can get
13:12 If companies in the UK don’t pay for interchange fees and I have a no foreign transaction card. Is the credit card company then paying for (taking a loss) for the rewards earned??
Financial literacy is needed across all social strata. I've known rich and poor people that couldn't manage money and working class poor people with excellent credit because they understood how to budget even if they didn't have a high income. One point missing from the report is a change in consumer habits. Years ago credit was for a MAJOR purchase. Not buffaloe wings and incidental spending. The envenerating creep of debt comes from using credit to replace cash on hand. Card companies do bear responsibility for pushing this type of usage and in some regards predatory interest rates. I will generalize most people can really on manage 1or 2 cards and many will never fully realize their reward benefits.
Sebby, FYI in my area, almost all gas stations have an upcharge for using credit cards. Supposedly it is to cover interchange fees, and ... bad credit charge losses or something ??? Each grade of gas has 2 prices, cash/credit.
Capping debit-card swipe fees didn't 🧮 up: It benefited merchants, but not consumers. I think capping credit swipe fees would be the same: it would not actually benefit consumers. I'm old enough to remember when we had usury laws in California and interest rates were capped at 18%. They repealed those years ago when inflation went sky high and banks couldn't charge what it actually cost them to lend money. And when inflation was low, they didn't bring them back.
most US cards has 0 foreign transaction fee, however non-US cards are not the same story.... most except a few cards in Canada has foreign transaction fees, including the Amex Plat... I don't know if what they are talking about includes data from outside the US though but its just something to note
💳 Glad you made this video. I had seen the segment on CNBC and I think it's worth people watching the whole thing as an exercise and critical thinking. It's good to see something on the news that confirms that some of us are in fact, making money off of our cards. ( and not by taking money away from sub prime borrowers as some would suggest)
My experience is that the fee is not what they want to dodge. It is the tax. Some of them even give you 5% discount if you use cash. It doesn't make sense if the fee is the reason.
Newbies should always look at it as: Having a credit card is a tool to manage your finances if used responsibly. It aint monopoly freebie money no matter the perks, the status it carries etc, because it still has to be paid back. You get the perks, status when you pay back in full every month.
I have a quick question. I just applied for an Amex business plus 2 weeks ago. If I want to apply for ihg premier business card from chase. Will I need to wait 6 months or any time like to apply for a new business card? And will chase business card give me a hard inquiry on personal side? I know you have to be under 5 24 but will it hit as an inquiry on your personal credit?
Also correct me if im wrong but these numbers don’t take into account finance offers, for example my appliances for the house I built are on a 5 year no interest plan. It shows i have a balance on the card, and i could pay it off, but why 🤷🏻♂️
Since I travel lot, I get credit cards that give me points to travel. I pay all utilities with my cards, and I pay them in full every month. The utilities just go through my credit card first. That to me is the fastest way and it’s doing what I do anyway. I don’t carry a balance because that is the way I pay my utilities every month..in full
Retailers aren't charging you extra for using a credit card. They cover the processing fees by raising prices across the board. Everyone who shops in a store that accepts credit cards is paying for your rewards.
My favorite graphic was the "Redistribution of wealth from less economically viable social groups to those that pay off the balance every month on the order of $15 billion per year. If we eliminated interest on credit cards, that $15 billion would be kept within the less economically viable social group!" Well...no. Chances are they would be in a "Pay over time" plan on credit cards (like a charge card with a variable limit month to month), or...taken to court with wage garnishments putting those garnishments in the liability column, but in arrears with a decreasing balance (hopefully) over time. There's a couple things that CNBC documentaries tend to hit really well on, and other things where it just seems like they're trying to push a narrative of social justice/equality, shoehorning data into a specific narrative. This "documentary" was an example of that. I'm not sure if reading comprehension and critical thinking just missed the mark with the investigators/reports/editors here, or if they just really were like, "Credit cards f*ck poor people over and give money back to rich people! It's like the plastic/metal version of trickle down economics!" The *primary issue* with those that *pay interest* on any credit card is explained right around the 14:28 mark, which is a lack of financial literacy and how credit cards actually work. The rewards cards as a subset of credit cards. If you understand credit cards, you understand it's a short-term, microloan/revolving line of credit. If you understand that paying the entire balance in full for that statement period will result in no "loan fee" (interest), then it should effectively act as a proxy for a debit card, but just with rewards attached to it. It's a *very basic* concept to understand, but so many people don't understand how it actually works, it's difficult to understand why people think it's some mysterious financial mechanism. For a documentary that's supposed to improve financial literacy (in some degree), they surely missed the mark by fluffing it with "this is how you get screwed over with them, unless you pay the statement off in full; but you probably don't do that since those people are in the minority, so we're here to show you what your interest payments are going towards; RICH PEOPLE!" I'm by no means rich. Hell, I started utilizing credit cards when I was hitting about 45k to 50k per year with a C1 Platinum and QuickSilver to get my score up. My credit score was about 680 at the time, but I was "gainfully employed" enough to pay for everything I needed per month with some extra for savings. I knew I was going to purchase a motorcycle, so I self-financed my AT-GATT using Chase Freedom with a $200 or $300 cash back after spending $1000 in the first three months, with 0% interest for 18 months. No-brainer for me. Paid it off within 1 year and got all my gear at an effective 30% discount from in-store promotions. Otherwise, I guess I'm someone that's now doing, "Pretty well", and typically pay out my closing statement values of about $5k to $6k (6k is atypical since I prefer to spend less than that, but I have a wife and kid, so....things happen sometimes) per month. I accrue no less than 2 points per dollar (C1VX), but it's probably closer to 2.75 points per dollar with how we spend in specific categories. The story I always like to tell is just before my wife got her first credit card. She's an immigrant from Thailand and has seen firsthand how loan/debt can crush a family. She's been interested in rewards CCs but is paranoid about debt and accruing interest. She was working at a restaurant at the time and all her co-workers were giving her patently false information as to how to build credit and a good credit score. They were saying stuff like, "Buy something big or a bunch of small things to max it out. Then pay it off over a year and you'll have a good credit score because it shows you can make the payments on big purchases and increase your credit limit!" Crazy sh*t like that. I told her, "No! *DO.NOT.DO.THAT.* " I then explained that if you've never had any credit exposure, the banks aren't sure what you're going to be like, and in a way they will consider you riskier than even a poorly scoring person, because they at least know someone with a bad score has difficulty keeping up with credit historically. With a no score, they don't know what you're like. Also, you won't get a credit score right away. It'll probably take 4 to 6 months for them to evaluate your spending and payment habits since credit is a *historical evaluation*. A credit score is the banks view of how *reliable* you are with handling debt. If you borrow money from them and pay them bank promptly, in full every month, then you're very reliable. This means they'll rank you higher than someone that doesn't do that, so they'll be more inclined to lend you more money in the future and maybe give you a better interest rate *if you need to borrow money to pay off over time, like a car loan or home loan*. Therefore, when you open your first credit card, you should only use it for gas (I was paying for our groceries at the time), that's it. That's so you can easily see what you're spending your money on, how much you spend on that and easily pay it off each month. Ideally, you'll have a lower credit limit so that it's very difficult for you to overspend. You'll decline before overspending, forcing you to pay it off first before utilizing it more. She opened a BoA Rewards credit card (I think 1.5% cash back) and in about 6 months her credit score was about 710 to 720. That was about 6 years ago. Now, 1 house and one undeveloped piece of land later, she's typically hovering around 770 to 792 (she hasn't cracked the 800 mark yet, which frustrates her at times). I'm firmly convinced people that don't understand credit see credit as "The Devil's Tool". But, once you understand credit, you can actually see how you can use it to help pick you up out of poverty since *so many things* are tied to credit and reliability (interest rates on any loans, car insurance is another *big one*, insurance on your house if you own one). Car insurance is probably the biggest that most people don't think about. My insurance was going to be about $360/month for a 2016 Fiat 500x and 2021 Audi Q5. I audited my auto insurance and found that one of my tenants was on my auto insurance, because I didn't update my home address. I knew his credit score was challenged, but his income is quite good, which is why I let him lease my house (he has a divorce on his history). After he was removed and everything was set how it should be, my monthly payment for insurance dropped to $152/month. That's over $200 per month in savings, absolutely insane how much poor credit can hurt your monthly expenditures.
Sigh if only there was a product that didn’t charge interest, and offered rewards giving the interchange back to the consumer. That product was rewards debit and was basically killed by the Durbin interchange fee cap
In basketball 50% of the teams that play will lose. That doesn’t make it unfair, games have winners and losers. But unlike Basketball, literally NOBODY has to lose with credit cards if they’re responsible. The game is pay off the balance if you spend, and maybe just don’t play if you can’t.
Get video Sebby as usual thanks for sharing that information, got a question I have the Amx hilton business card (going into my 2nd year of this card) and was looking for any downgrades, th card is not worth it for me anymore. Are there any downgrades for this business card? Or will Have to cancel this card? Again thanks for sharing and keep the content coming.
Good point on the average balance. It drives me crazy when I see these people throwing around these numbers without taking the time to think about them. I probably have upwards of $1000 post each month, but I never carry a balance. And I would have more, but some of my cards I pay of weekly. 😂
Average anything is a foolish measure in any case. Median is much more useful. Example: I live in a village where everyone makes $50k a year. Bill Gates buys a house here. Average income of the village is now several million dollars. But no one actually makes that. I and my neighbors make $50k and one guy makes a billion, so the average is completely skewed.
I would guess that the income partial statement you showed is from Amex as they make a lot in swipe fees and target higher earrners who don't carry balances and in fact some of their cards don't even allow you to carry a balance. Therefore, interest income would be low.
While I do play the credit card game given how things are set up now, I'd prefer a payment system where I paid a smaller interchange fee vs 3% but with the option to recover some of that by jumping through hoops set up by some bank's points system.
I live outside the US and overwhelmingly cash is used instead of credit cards and alot of merchants dont accept credit cards. As a result, very few people have credit card debt, or debt in general. People live within their means. It's really bizarre.
Honestly this a microcosm for life in general. The more educated the consumer the better they will be able to take advantage of opportunities as opposed to being taken advantage of. It's disingenuous to discount the fact that there is a substantial portion of the population that would benefit if credit cards weren't even a thing. Not falling into the interest trap and benefiting from lower prices (no swipe fees) across the board. Having said that, this is the real world. You're always going to have to have winners and losers. Often personal responsibility is all you've got.
Not only is this a great video about credit cards and debt but it ended up outlining exactly why we in the states just cannot trust or even watch mainstream news anymore. You absolutely dismantled CNBC with two spreadsheets and common sense. The difference between the two scenarios of balance-carrying vs the monthly payoff and the way they completely ignored that and showed one number is nothing short of disgusting. Equally bad as the woman's leading and belittling tone in her question towards the end. Bravo, sir.
I think you would need more than 5 to 1 balance holders to default. $1000 at 20% for 30 days is $30.55, not $200. Someone who is carrying that balance would be motivated to pay well in advance of a year.
stores do increase prices slightly because of the increased likelihood that more than 90% of the customer pays for the grocery bill using a credit card. so the customer pays for the transaction fee through increased pricing. it's just the nature of the market. if visa/mc didnt have these fees, prices might come down ever so slightly. Stores do not like losing money they are forced to pay for needing to use Visa/MC networks.
🧮 Nice video! Unfortunately it sounds like the CNBC video audio is out of phase sometimes on the L/R channels, is a bit distracting when wearing headphones
I watched this video when it premiered and felt as if they were pushing a particular narratives to get their points across. Multiple things can be true but the way that video framed some of those things was a bit misleading as you pointed out.
Want to know what will happen when interest rates are capped? That's what we had before states were allowed to have their own Usary Laws and South Dakota and Delaware allowed higher interest rates. That fueled the expansion of more people having credit cards. Without interest to cover government-mandated fraud protection and to pay for those who default on their loans, banks are going to be more stingy with their credit products. Higher requirements to get credit and lower credit limits. Which will hurt low income customers more than high income.
1 trillion in CC debt sounds like a problem to me. The big banks are raking in money from consumer debt. It’s all designed to keep you there. Carrying a balance is just dumb
You said "the meta that we're moving towards is high annual fees". You may be too young to remember but in the "old days" (before Providian) basically every card had an annual fee - it was the cost of having the card. When Providian started offering no-annual-fee cards to the subprime market, it changed the "game" of credit cards significantly. If interest were to be capped and interchange fees eliminated, there would be no choice but to go back to the old model. Since EVERY card would have a fee, there would be no reason to offer perks or rewards any more except at the high end of the market. This would be terrible for middle income people who use the cards responsibly, and might once again make cards unavailable to subprime consumers.
"I'm getting a vibe that there's a narrative..." Yup. Low income people apparently don't have agency, so it's the CC companies' fault, so wealthier and/or more disciplined people shouldn't have nice things, because social justice, income inequality, or whatever. That having been said, we do need to do a better job of teaching young people better life skills, including but not limited to personal finance.
Low-income folks sometimes run up balances out of desperation, especially when they are between jobs. If we want to help them, cutting rewards and swipe fees isn't the answer. Lower interest rates and financial education would be of more use.
The mis-statement about Foreign Transaction fees is proof that the people who composed this CNBC story don't really know what they are talking about! The entire CNBC story was filled with erroneous statements that were not in true context AS YOU EXPOSED. Further the voice-over narration of the CNBC video was comical, akin to some true-crime podcasts. I suspect it was 100% outsourced by CNBC to some podcast creator who used that one Indian guy + ChatGPT to gather the information on the subject matter - typical for CNBC.
CNBC saying that super-prime credit card users make money and sub-prime credit card users loose money sounds like they are trying to demonize having a super-prime credit score and understanding of finances 🤔 now why would they want to do that 🧐 Great video Sebby!
Dave Ramsey spins a weird variant of this by saying that people making money from rewards cards are being paid by sub prime customers. Banks don’t work like that. Rewards cards are fine once you can pay on time and you are disciplined. If you’re challenged financially, stay away from them.
Card holders r paying for the rewards it’s an enticement to put all transactions on card then the card holder gets caught having to pay back a larger balance with higher interest
Wow this video shows how disconnected you are with the avg consumers spending habits and the effect incentives have on peoples spending habits... First bad video ive seen from you..
It is not that Sebby should be more connected to average consumers spending habits. It is the "average consumers" that should be more connected to Sebby, instead of CNBC.
🧮 Interesting video. It appears that the CNBC video pushed a narrative that credit cards are evil. At least judging by the pieces shown in Ask Sebby's video. I think the winners and losers in the credit card space comes down to who is best disciplined with their money. It has less to do with actual income and more to do with spending behavior.
🧮 (…yes, the abacus came up when I typed “calculator,” it counts) It’s the eternal “temptation vs. self-control” debate. The rules are laid out like rope, and it’s up to those playing to figure out how to use that rope to climb up/down rather than hang themselves with it.
2:22 I literally mimicked the words as you were saying them. Yes. Premium card holders pay annual fees that are offset by all kinds of credits and benefits, furthermore, these customers would pay more for those benefits out of pocket if not for the premium card.
Retailers aren't charging you extra for using a credit card. They cover the processing fees by raising prices across the board. Everyone who shops in a store that accepts credit cards is paying for your rewards.
Since I travel lot, I get credit cards that give me points to travel. I pay all utilities with my cards, and I pay them in full every month. The utilities just go through my credit card first. That to me is the fastest way and it’s doing what I do anyway. I don’t carry a balance because that is the way I pay my utilities every month..in full
💳 Sebby's Card Picks: www.asksebby.com/credit-cards
They definitely have a narrative that they are trying to shape. However, like Sebby, that doesn’t apply to me because I rarely carry a balance, and I use the cards to buy things that I could have very well paid cash for. And most often I don’t even wait until my statement comes before I pay it off.
😊
I don't think it's a "narrative", but like you said they just are talking about it from the perspective of people who don't use credit cards correctly. People like us aren't the norm.
All comes down to one’s discipline. If you see a 30k limit and think you can just go buy 30k worth of stuff then these things aren’t for you. Essentially same concept for alcohol and gambling. Some people can do it in moderation and be fine with others ruin their lives with it
Agree!
2:22 I literally mimicked the words as you were saying them. Yes. Premium card holders pay annual fees that offset by all kinds of credits and benefits, furthermore, these customers would pay more for those benefits out of pocket if not for the premium card.
Sebby thanks for pointing out that the Durbin amendment update didn’t result in retailers passing the savings on.. from my perspective that’s game over on the idea of capping interchange because if merchants don’t pass on the savings consumers end up hurt
that's why brink and mortar stores are closing because people are not able to afford the increase prices.
I think one of the double edged swords of better education and financial literacy is that it's impossible for everyone to win. If more people are getting credit card rewards, then the average reward per person will be less. It's kind of interesting to think about that Sebby's spreading awareness of this stuff will eventually reduce the amount of rewards he can get
This is the same effect that causes the airport lounges to always be full now.
13:12 If companies in the UK don’t pay for interchange fees and I have a no foreign transaction card. Is the credit card company then paying for (taking a loss) for the rewards earned??
Financial literacy is needed across all social strata. I've known rich and poor people that couldn't manage money and working class poor people with excellent credit because they understood how to budget even if they didn't have a high income. One point missing from the report is a change in consumer habits. Years ago credit was for a MAJOR purchase. Not buffaloe wings and incidental spending. The envenerating creep of debt comes from using credit to replace cash on hand. Card companies do bear responsibility for pushing this type of usage and in some regards predatory interest rates. I will generalize most people can really on manage 1or 2 cards and many will never fully realize their reward benefits.
Sebby, FYI in my area, almost all gas stations have an upcharge for using credit cards. Supposedly it is to cover interchange fees, and
... bad credit charge losses or something ??? Each grade of gas has 2 prices, cash/credit.
Our first rewards card was the Discover it... and we still use it. Love it!
11:36 the one with widespread "once in a lifetime" sign-up bonus language. guessed mainly due to the font they use xD
Capping debit-card swipe fees didn't 🧮 up: It benefited merchants, but not consumers. I think capping credit swipe fees would be the same: it would not actually benefit consumers. I'm old enough to remember when we had usury laws in California and interest rates were capped at 18%. They repealed those years ago when inflation went sky high and banks couldn't charge what it actually cost them to lend money. And when inflation was low, they didn't bring them back.
It's just like tips and tax-not-included: wherever businesses can normalize raised prices, they will do so quietly and shamelessly.
most US cards has 0 foreign transaction fee, however non-US cards are not the same story.... most except a few cards in Canada has foreign transaction fees, including the Amex Plat... I don't know if what they are talking about includes data from outside the US though but its just something to note
Here in California almost all gas stations have a CC price and a Debit/cash price.
💳 Glad you made this video. I had seen the segment on CNBC and I think it's worth people watching the whole thing as an exercise and critical thinking. It's good to see something on the news that confirms that some of us are in fact, making money off of our cards. ( and not by taking money away from sub prime borrowers as some would suggest)
Most of the small businesses in my area have started charging a 3.5% fee to use a credit card. They all have signes posted about it.
My experience is that the fee is not what they want to dodge. It is the tax. Some of them even give you 5% discount if you use cash. It doesn't make sense if the fee is the reason.
A majority of gas stations have different cash and credit card prices.
@asksebby they they say foreign transaction fees, do you think she meant the spread between the 2 currency?
This may be your best video yet - thank you!
Glad you enjoyed it!
Newbies should always look at it as:
Having a credit card is a tool to manage your finances if used responsibly. It aint monopoly freebie money no matter the perks, the status it carries etc, because it still has to be paid back. You get the perks, status when you pay back in full every month.
I have a quick question. I just applied for an Amex business plus 2 weeks ago. If I want to apply for ihg premier business card from chase. Will I need to wait 6 months or any time like to apply for a new business card? And will chase business card give me a hard inquiry on personal side? I know you have to be under 5 24 but will it hit as an inquiry on your personal credit?
Where can I contact you and get some answers for couple questions
Also correct me if im wrong but these numbers don’t take into account finance offers, for example my appliances for the house I built are on a 5 year no interest plan. It shows i have a balance on the card, and i could pay it off, but why 🤷🏻♂️
Since I travel lot, I get credit cards that give me points to travel. I pay all utilities with my cards, and I pay them in full every month. The utilities just go through my credit card first. That to me is the fastest way and it’s doing what I do anyway. I don’t carry a balance because that is the way I pay my utilities every month..in full
Retailers aren't charging you extra for using a credit card. They cover the processing fees by raising prices across the board. Everyone who shops in a store that accepts credit cards is paying for your rewards.
My favorite graphic was the "Redistribution of wealth from less economically viable social groups to those that pay off the balance every month on the order of $15 billion per year. If we eliminated interest on credit cards, that $15 billion would be kept within the less economically viable social group!"
Well...no. Chances are they would be in a "Pay over time" plan on credit cards (like a charge card with a variable limit month to month), or...taken to court with wage garnishments putting those garnishments in the liability column, but in arrears with a decreasing balance (hopefully) over time.
There's a couple things that CNBC documentaries tend to hit really well on, and other things where it just seems like they're trying to push a narrative of social justice/equality, shoehorning data into a specific narrative.
This "documentary" was an example of that. I'm not sure if reading comprehension and critical thinking just missed the mark with the investigators/reports/editors here, or if they just really were like, "Credit cards f*ck poor people over and give money back to rich people! It's like the plastic/metal version of trickle down economics!" The *primary issue* with those that *pay interest* on any credit card is explained right around the 14:28 mark, which is a lack of financial literacy and how credit cards actually work. The rewards cards as a subset of credit cards. If you understand credit cards, you understand it's a short-term, microloan/revolving line of credit. If you understand that paying the entire balance in full for that statement period will result in no "loan fee" (interest), then it should effectively act as a proxy for a debit card, but just with rewards attached to it. It's a *very basic* concept to understand, but so many people don't understand how it actually works, it's difficult to understand why people think it's some mysterious financial mechanism. For a documentary that's supposed to improve financial literacy (in some degree), they surely missed the mark by fluffing it with "this is how you get screwed over with them, unless you pay the statement off in full; but you probably don't do that since those people are in the minority, so we're here to show you what your interest payments are going towards; RICH PEOPLE!"
I'm by no means rich. Hell, I started utilizing credit cards when I was hitting about 45k to 50k per year with a C1 Platinum and QuickSilver to get my score up. My credit score was about 680 at the time, but I was "gainfully employed" enough to pay for everything I needed per month with some extra for savings. I knew I was going to purchase a motorcycle, so I self-financed my AT-GATT using Chase Freedom with a $200 or $300 cash back after spending $1000 in the first three months, with 0% interest for 18 months. No-brainer for me. Paid it off within 1 year and got all my gear at an effective 30% discount from in-store promotions. Otherwise, I guess I'm someone that's now doing, "Pretty well", and typically pay out my closing statement values of about $5k to $6k (6k is atypical since I prefer to spend less than that, but I have a wife and kid, so....things happen sometimes) per month. I accrue no less than 2 points per dollar (C1VX), but it's probably closer to 2.75 points per dollar with how we spend in specific categories.
The story I always like to tell is just before my wife got her first credit card. She's an immigrant from Thailand and has seen firsthand how loan/debt can crush a family. She's been interested in rewards CCs but is paranoid about debt and accruing interest. She was working at a restaurant at the time and all her co-workers were giving her patently false information as to how to build credit and a good credit score. They were saying stuff like, "Buy something big or a bunch of small things to max it out. Then pay it off over a year and you'll have a good credit score because it shows you can make the payments on big purchases and increase your credit limit!" Crazy sh*t like that. I told her, "No! *DO.NOT.DO.THAT.* " I then explained that if you've never had any credit exposure, the banks aren't sure what you're going to be like, and in a way they will consider you riskier than even a poorly scoring person, because they at least know someone with a bad score has difficulty keeping up with credit historically. With a no score, they don't know what you're like. Also, you won't get a credit score right away. It'll probably take 4 to 6 months for them to evaluate your spending and payment habits since credit is a *historical evaluation*. A credit score is the banks view of how *reliable* you are with handling debt. If you borrow money from them and pay them bank promptly, in full every month, then you're very reliable. This means they'll rank you higher than someone that doesn't do that, so they'll be more inclined to lend you more money in the future and maybe give you a better interest rate *if you need to borrow money to pay off over time, like a car loan or home loan*. Therefore, when you open your first credit card, you should only use it for gas (I was paying for our groceries at the time), that's it. That's so you can easily see what you're spending your money on, how much you spend on that and easily pay it off each month. Ideally, you'll have a lower credit limit so that it's very difficult for you to overspend. You'll decline before overspending, forcing you to pay it off first before utilizing it more.
She opened a BoA Rewards credit card (I think 1.5% cash back) and in about 6 months her credit score was about 710 to 720. That was about 6 years ago. Now, 1 house and one undeveloped piece of land later, she's typically hovering around 770 to 792 (she hasn't cracked the 800 mark yet, which frustrates her at times).
I'm firmly convinced people that don't understand credit see credit as "The Devil's Tool". But, once you understand credit, you can actually see how you can use it to help pick you up out of poverty since *so many things* are tied to credit and reliability (interest rates on any loans, car insurance is another *big one*, insurance on your house if you own one).
Car insurance is probably the biggest that most people don't think about. My insurance was going to be about $360/month for a 2016 Fiat 500x and 2021 Audi Q5. I audited my auto insurance and found that one of my tenants was on my auto insurance, because I didn't update my home address. I knew his credit score was challenged, but his income is quite good, which is why I let him lease my house (he has a divorce on his history). After he was removed and everything was set how it should be, my monthly payment for insurance dropped to $152/month. That's over $200 per month in savings, absolutely insane how much poor credit can hurt your monthly expenditures.
10:40 and there's the narrative where this stops being journalism and becomes policy advocation. 🙄
This like when Kroger was not going to accept Visa cards due to the higher interchange fees, but reversed their decision later.
Sigh if only there was a product that didn’t charge interest, and offered rewards giving the interchange back to the consumer. That product was rewards debit and was basically killed by the Durbin interchange fee cap
In basketball 50% of the teams that play will lose. That doesn’t make it unfair, games have winners and losers. But unlike Basketball, literally NOBODY has to lose with credit cards if they’re responsible.
The game is pay off the balance if you spend, and maybe just don’t play if you can’t.
Well, lottery is even more unfair and they don't care. These garbage media just keep spitting sht every single day.
Get video Sebby as usual thanks for sharing that information, got a question I have the Amx hilton business card (going into my 2nd year of this card) and was looking for any downgrades, th card is not worth it for me anymore. Are there any downgrades for this business card? Or will Have to cancel this card? Again thanks for sharing and keep the content coming.
🧮Another great content video Sebby. Gotta love the Lagavulin 16! I never buy whisky out either. Usually only wine.
Good point on the average balance. It drives me crazy when I see these people throwing around these numbers without taking the time to think about them. I probably have upwards of $1000 post each month, but I never carry a balance. And I would have more, but some of my cards I pay of weekly. 😂
Average anything is a foolish measure in any case. Median is much more useful. Example: I live in a village where everyone makes $50k a year. Bill Gates buys a house here. Average income of the village is now several million dollars. But no one actually makes that. I and my neighbors make $50k and one guy makes a billion, so the average is completely skewed.
I would guess that the income partial statement you showed is from Amex as they make a lot in swipe fees and target higher earrners who don't carry balances and in fact some of their cards don't even allow you to carry a balance. Therefore, interest income would be low.
9:00 If you're really good at blackjack, you can have an edge against the house. Not on slots, though- never play slots
While I do play the credit card game given how things are set up now, I'd prefer a payment system where I paid a smaller interchange fee vs 3% but with the option to recover some of that by jumping through hoops set up by some bank's points system.
I live outside the US and overwhelmingly cash is used instead of credit cards and alot of merchants dont accept credit cards. As a result, very few people have credit card debt, or debt in general. People live within their means. It's really bizarre.
Interesting! Which country do you live in?
@@AskSebby Panama.
It’s bizarre you think those of us with cards don’t live within our means
Honestly this a microcosm for life in general. The more educated the consumer the better they will be able to take advantage of opportunities as opposed to being taken advantage of. It's disingenuous to discount the fact that there is a substantial portion of the population that would benefit if credit cards weren't even a thing. Not falling into the interest trap and benefiting from lower prices (no swipe fees) across the board. Having said that, this is the real world. You're always going to have to have winners and losers. Often personal responsibility is all you've got.
No calculator emoji ?
🧮 closest I could find on iOS 😂
Heh, will keep that in mind for future videos 😅
Hey Sebby, what games do you play in Vegas?
Poker 🤓
Sebby is the credit card guru 🧘
Sebby, how do we get you on CNBC to tell them all the truth?
CNBC doesnt want the truth lol
Not only is this a great video about credit cards and debt but it ended up outlining exactly why we in the states just cannot trust or even watch mainstream news anymore. You absolutely dismantled CNBC with two spreadsheets and common sense. The difference between the two scenarios of balance-carrying vs the monthly payoff and the way they completely ignored that and showed one number is nothing short of disgusting. Equally bad as the woman's leading and belittling tone in her question towards the end. Bravo, sir.
I think you would need more than 5 to 1 balance holders to default. $1000 at 20% for 30 days is $30.55, not $200. Someone who is carrying that balance would be motivated to pay well in advance of a year.
Having money on you is dangerous. If I had a business I wouldn’t accept cash. No one is going to rob me I don’t have cash in my store
The us go altitude secured earns the same rewards as the unsecured one
stores do increase prices slightly because of the increased likelihood that more than 90% of the customer pays for the grocery bill using a credit card. so the customer pays for the transaction fee through increased pricing. it's just the nature of the market. if visa/mc didnt have these fees, prices might come down ever so slightly. Stores do not like losing money they are forced to pay for needing to use Visa/MC networks.
🧮love the reaction video. for some reason when i first saw the video im like yea i agree. but i love seeing the arguing points. they make sense.
The CNBC video has the "tax the rich" narrative to it.
🧮 Nice video! Unfortunately it sounds like the CNBC video audio is out of phase sometimes on the L/R channels, is a bit distracting when wearing headphones
I watched this video when it premiered and felt as if they were pushing a particular narratives to get their points across. Multiple things can be true but the way that video framed some of those things was a bit misleading as you pointed out.
So what do you okay at the casino? Baccarat?
Poker
In research terms, we refer to this as confirmation bias: you only find what you are looking for! 🤓
Sebby, would LOVE to see you do a vid on your Vegas gaming strategy! Just 1 financially risky post per year? Thanks for all that you do!
When they say rewards cards i think they are including cash back cards...
Want to know what will happen when interest rates are capped? That's what we had before states were allowed to have their own Usary Laws and South Dakota and Delaware allowed higher interest rates. That fueled the expansion of more people having credit cards. Without interest to cover government-mandated fraud protection and to pay for those who default on their loans, banks are going to be more stingy with their credit products. Higher requirements to get credit and lower credit limits. Which will hurt low income customers more than high income.
1 trillion in CC debt sounds like a problem to me. The big banks are raking in money from consumer debt. It’s all designed to keep you there. Carrying a balance is just dumb
You said "the meta that we're moving towards is high annual fees". You may be too young to remember but in the "old days" (before Providian) basically every card had an annual fee - it was the cost of having the card. When Providian started offering no-annual-fee cards to the subprime market, it changed the "game" of credit cards significantly. If interest were to be capped and interchange fees eliminated, there would be no choice but to go back to the old model. Since EVERY card would have a fee, there would be no reason to offer perks or rewards any more except at the high end of the market. This would be terrible for middle income people who use the cards responsibly, and might once again make cards unavailable to subprime consumers.
Im here for the spreadsheets 😂 unnecessary? Yes. Fun/spicy? Also yes.
🤓
🏧 close enough to calculator emoji
"I'm getting a vibe that there's a narrative..." Yup. Low income people apparently don't have agency, so it's the CC companies' fault, so wealthier and/or more disciplined people shouldn't have nice things, because social justice, income inequality, or whatever.
That having been said, we do need to do a better job of teaching young people better life skills, including but not limited to personal finance.
Low-income folks sometimes run up balances out of desperation, especially when they are between jobs. If we want to help them, cutting rewards and swipe fees isn't the answer. Lower interest rates and financial education would be of more use.
I think I am going to vote for Sebby.
Sebby on a Sunday!!!!!
😊
The mis-statement about Foreign Transaction fees is proof that the people who composed this CNBC story don't really know what they are talking about! The entire CNBC story was filled with erroneous statements that were not in true context AS YOU EXPOSED. Further the voice-over narration of the CNBC video was comical, akin to some true-crime podcasts. I suspect it was 100% outsourced by CNBC to some podcast creator who used that one Indian guy + ChatGPT to gather the information on the subject matter - typical for CNBC.
CNBC saying that super-prime credit card users make money and sub-prime credit card users loose money sounds like they are trying to demonize having a super-prime credit score and understanding of finances 🤔 now why would they want to do that 🧐
Great video Sebby!
IF banks would only charge 10% They would still make Money It's all about Greed
Dave Ramsey spins a weird variant of this by saying that people making money from rewards cards are being paid by sub prime customers. Banks don’t work like that. Rewards cards are fine once you can pay on time and you are disciplined. If you’re challenged financially, stay away from them.
Not our fault stupid people get credit cards and assume you can just use the entire limit
Calculator emoji
Less-financially-literate people do dumb things so let’s punish the savvy people to balance things out. Better idea: more personal finance education.
sebby is god.
Sebby needs a Spreadsheets Anonymous..... ;-)
🤓
6:17 Lagavulin 16 🤤
🧮 CNBC
Card holders r paying for the rewards it’s an enticement to put all transactions on card then the card holder gets caught having to pay back a larger balance with higher interest
Paying interest negates all reward benefits. If someone doesn't have self control, they shouldn't be using credit cards.
🧮It's pretty telling that CNBC basically only talked about C1 instead of the biggest player in the space IMO
First
🥇
Wow this video shows how disconnected you are with the avg consumers spending habits and the effect incentives have on peoples spending habits... First bad video ive seen from you..
It is not that Sebby should be more connected to average consumers spending habits. It is the "average consumers" that should be more connected to Sebby, instead of CNBC.
🧮 Interesting video. It appears that the CNBC video pushed a narrative that credit cards are evil. At least judging by the pieces shown in Ask Sebby's video. I think the winners and losers in the credit card space comes down to who is best disciplined with their money. It has less to do with actual income and more to do with spending behavior.
🧮 (…yes, the abacus came up when I typed “calculator,” it counts)
It’s the eternal “temptation vs. self-control” debate. The rules are laid out like rope, and it’s up to those playing to figure out how to use that rope to climb up/down rather than hang themselves with it.
Abacus counts! :)
🧮
🧮🤔 ✌🏻
🧮It's pretty telling that they basically only talked about C1 instead of the biggest player in the space IMO
There were so many problems with the arguments in this video 🫤
so a firm no on Vegas hotel minibars Sebby? 🧮
Never ❌
2:22 I literally mimicked the words as you were saying them. Yes. Premium card holders pay annual fees that are offset by all kinds of credits and benefits, furthermore, these customers would pay more for those benefits out of pocket if not for the premium card.
Retailers aren't charging you extra for using a credit card. They cover the processing fees by raising prices across the board. Everyone who shops in a store that accepts credit cards is paying for your rewards.
Since I travel lot, I get credit cards that give me points to travel. I pay all utilities with my cards, and I pay them in full every month. The utilities just go through my credit card first. That to me is the fastest way and it’s doing what I do anyway. I don’t carry a balance because that is the way I pay my utilities every month..in full
First
🥈
🧮
🧮It's pretty telling that they basically only talked about C1 instead of the biggest player in the space IMO
🧮
🧮💰
🧮
🧮🧮🧮