I got robbed 3k off my debit card for concert tickets being extremely careful with it. It was a whole ordeal, missing scheduled payments while making transfers, and getting reimbursed luckily. Compare that to the no liability credit card, it can be reversed in minutes. I have the 2-5% rewards cards and never carry, but the 'free money' is not why I use it. It is purely to reduce my liability. I completely believe that credit cards will influence you to spend more and that you are one step away from disaster, the studies and stats on this are pretty clear.
Can you explain when interest starts accruing on a balance? For example, I pay off my balance every two weeks and I don't think I am paying any interest. I will also pay more than I owe so that I have a negative balance. Is this a good idea?
I only use credit card, have had fraudulent charges and it just feels far less risky when it’s on credit card and easy to fix. I only use my debit card if I need to make some kind of deposit or something at the bank, just to make sure it’s always the right account… one time they deposited into the wrong account and luckily I caught it by looking at the receipt even though it was correct on the slip… never did it manually ever again. Edit: I do 2% on all purchases… 2% off everything I purchase… with kids, this makes a huge difference.
Credit cards transfer money from customers who don’t use them to customers who do. It’s one of the many ways in which life is far more expensive when poor. -cash back rewards are paid for from the small cut of the transaction that is taken from the vendor with each credit card use -this added cost to stores is passed on to ALL customers, not just to those who pay with credit cards
If you have a well funded emergency fund, you could still be a spender and have a credit card. Makes you a bit of a saver but doesn’t mean you’re maximizing savings for retirement, HSA, etc
If you know what are doing that can pay off their credit card every month or just super rich, use credit. Poor people or no Self control, use debt card.
You can use credit cards as long as you pay it off that month. Advantage is you get reward points and travel points. Disadvantage if you're a compulsive buyer you might max out your cards. I am debt free.
@@RyChOr2005 For me the cash back is a bonus and not the reason to buy, but I travel constantly for work. I've spent more time dealing with stolen debit card numbers than I have with credit cards themselves. There is extra security from the credit card itself. It doesn't change the way I spend money, but for purchases I need to make anyway, a little cash back is better than none. I actually use the Apple Card and the one time it was compromised I found out that by the nature of it's design I did not need a physical card replacement to change my card number. It's now the only card I use while traveling and nearly every purchase I make as long as Mastercard is accepted. I do keep a Visa card for retailers that don't accept Mastercard.
@@Stylez-13you would be able to get a credit card no problem, its just that you will have to start off with a very small credit limit and will have to work your way to increasing it about every 6 months
I’ve used credit cards for 99% of my purchases since I was 20 or so. Never paid interest, never out of my means. 810+ credit score. All the cash back rewards. 😎
If feels good not paying interest on my credit card too(most of the time). In all my years of using cc's I believe i only paid about 300-400$ on interest. But I was foolishly close to my limit all the time so I could never really build my credit. Im a believer that If I dont have at least 50% of the purchase cost on hand(considering all bills are paid and money in long term savings) I cannot afford what I want.
I've been hacked 3 times, with the lastest having all my savings drained because I used a debit card at a gas station. Using a credit card, your money is not at risk for fraud.
@@johnconner8437 It took the bank 6 weeks to return my stolen money while I still had bills to pay. And I had to be proactive in disputing the faulty transactions, while with a credit card it's easier to dispute and they do most of the work.
In my own circle of friends, the ones who get into credit card debt have much more going on in their lives that just overspending. They have health issues, self-esteem issues, employment issues, family that sucks they dry, drinking problems, partying too much, not giving a crap problem, and definitely math and not knowing any better problem.
As a general rule, I agree with David in that most people should avoid credit cards. I’ve used them responsibly for years, however I have made some bad choices in the past by getting services now instead of waiting until I had the money. I’ve also had buyers remorse having used a credit card when I wouldn’t have made the purchase with cash at the time. Also, when I use the debit card I see that balance go down immediately and it causes me to be more conservative with my spending.
People often seem to forget that swiping a debit card is just as emotionally painless as swiping a credit card. The whole "credit cards make you spend more" argument applies to debit cards as well. People also seem to forget that if you stick to a budget, the way you pay for stuff doesn't really matter. So you might as well get 2% back on everything.
the people who dont need to see this video are people who got their finance under control so it dont matter which for of payment they use. the people that need to see this type of vids are the people that is part of teh $1.4 trillion CC debt.
Nah. If I have 3k in my account and my insurance payment is due, I am not going to get down to the danger zone but if I know I have 3 credit cards with 10k limits and I can if needed carry the balance then I will never not be able to pay bills that require debit. It's the feeling of the remaining access to funds.
I understand your points, but I cannot be trusted with a credit card based on my past history. When things are good, I forget to pay things off; when things are not so good, I spend too much. I am the big dumb.
I racked up about $18K in credit card debt. First thing I did was stop using credit cards, transferred it to a 0%, and went all cash with a debit card. Down to $2500 and once that’s done will have no consumer debt at all. Will once again have control of my full income to devote to e-fund and investing.
With debit cards, what worries me is that it's linked to your bank account and if it's stolen, it takes at least 2 weeks to get your money replaced from the bank.
mate, if someone can get your card details and steal all your money to the point you can't live for 2 weeks. you are doing finance very wrong. every bank account has a savings account and a personal account, put most of your money in the interest account and only have what you need. I'm with Ubank and they allow up to 10 accounts for free. I have a savings account just for holding the money for that week, a savings account for actual savings and then an account for bills to withdraw and an account for my personal spending. all my money goes into the savings account for holding my money and I transfer it from there. if someone got my card details they would get a maximum of $10 cause that's all I keep in my savings account. since all bank accounts are free to have nowadays I then set up a second bank with my emergency fund, that way it's easy to access when I need it but it is out of sight and out of mind, getting me interest every month.
One of the Ramsey points is that they believe the points are “scummy” since the reason they offer them is because someone isn’t able to pay their card and pays interest which allows you to get benefits.
I mean that same logic could apply to the high yield savings accounts they advertise. You only get the interest because someone else is paying a higher rate of interest on a loan.
That's only half true. Credit card companies make money in more ways just interest on unpaid balances. Amex, for example, makes most of their revenue from interchange fees. And besides that most credit cards are issued in partnership with banks. Banks have many revenue steams, and high interest credit card debt is only one part of that. Even if they didn't make any money from people not paying their credit card balances, they'd be paying out points on credit cards. Sure, it'd probably be at lower percentages, but the points would still be there.
It’s also scummy that companies don’t allow you to be fully vested in your 401k until you’ve worked for them for 4+ years, does that mean I should just not donate to my 401k and collect the 4% match of free money?
Dave Ramsey advice is for financially incompetent folks who are deep in debt. If you know you are financially responsible, then there’s nothing to worry about and a majority of Dave’s advice is pretty god awful.
This is where you're wrong. The advice that people who have credit cards spend more is true for everyone. This has been proven to be true. If you get an offer for 5% on a $2000 spend. You're going to find a way to meet that threshold and I can guarantee you more than 5% are going to be spent on items you could have done without.
@@ret4kind got proof to back up that statement? Because my American Express statements say otherwise…and again…if you spend more with a CC but still pay it off every month, why does it matter? I’ve racked up enough points on my card to travel to Japan and back home TWICE and I have never got a late fee or interest payment.
@@PrimitiveAK "if you spend more with a CC but still pay it off every month, why does it matter?" "if you spend more with a CC" "spend more with a CC" "spend more"
Yeah he also prioritizes paying tithing, withdrawing 8% annually on retirement, and constantly downplays financial struggles that young people face that his generation didn't. Bad advice and out of touch. Ramsey isn't worth listening to unless you're a massively indebted middle aged+ religious person.
Something overlooked is the vendor fees, credit card companies make a significant part of their profit off of charging vendors processing fees! Great video Humphrey as always!
1:42 I remember a 60 Minutes show with Moreley Shaffer where his credit card insider guest said guys who pay their balance every month are called "deadbeats" 😂😂😂.
If fraudulent activity happens on your credit card, it's the bank's money that is in jeopardy. If fraudulent activity happens on your debit card then it's your own personal money at risk. Sure, issues could be resolved with your checking account but if the balance gets drawn down it may cause other bills to bounce in the meantime.
@@Jeff-p5i2w Welcome to the club. And besides the money (The cash gone bye-bye plus over $800 in bounce fees) the time and the hassle is murder and your credit score takes a big ding.
Where I live (the Netherlands) creditcards don't give any type of rewards. The only reason I have a creditcard is for when I'm traveling outside of Europe or if I want to buy something from foreign websites.
Its probably because you have legal laws on how much interest can be collected on credit cards or the culture means everyone is educated on the ways to debts, so no one is dumb enough to buy things they can't afford on revolving accounts with 20% interest rates. The rewards are there to entice people to buy more and hopefully not pay them off to collect interest, which actually does work on many people.
@@rebeltheharem7028 we do have different rules and laws, also we do not have an american style credit score. Also a culture of not spending more money then you have, altough the younger generations are going for car loans and lease plans, i'm from the 70's we learned to save up before buying something, only a mortgage is acceptable as a debt
I am also Dutch and from the '70's. Indeed do not spend more then you earn and ask yourself the question: do I really need that (item). Most, if not all adults in our Netherlands have a debit card. Most do not even walk around with cash. Or they use their mobile phone. A credit card is good to pay the toll on the highways in Italy and France. Also in our country almost no shops accept them. Shops want to be paid by debit card because it is faster and they do not have to count the money at the end of the day ( costs time) and they can not be robbed because of having cash in the shop. Almost nobody accepts 200 or 500 € bills.
I'm from Barbados and we really only get points and rewards with the high end credit cards(gold,platinum and black cards)not everyone can afford to have those cards.with the normal credit cards,we don't even get any rewards.
@@abelfaber4457Bonus Fact: The Netherlands Banks will lend you more money than what your house is worth (great for the individual, but not so much for their economy) - TH-cam Economist “economics explained”
What you are missing is the transaction fees the merchant has to pay. These are double for credit cards vs. debit cards. All those seemingly great rewards are just a fraction of this additional cost of the products purchased with the card.
The only correct payment method is carrying around a million dollars cash in a metal briefcase with you everywhere you go, but I don't have that kind of money, nor do I own a cool briefcase, so I just use a credit card. I pay it off weekly.
I hope u are paying the full balance 🤣🤣 like I do and I pay the full balance a day before the closing date not due date the statement closing date I hope u kno the fuckin difference 😌😌
I just moved back to using debit. I found myself overspending when using credit card. Not to the point of creating new debt, but just as you said, you have no emotional connection to the swipe. I want to retain more cash. This will force me to be more disciplined and get back some control. :)
Debit card is also good for the times when some services charge fees if you use a credit card and not a debit also to use withdraw cash at the bank or ATM (excluding using your phone app) and also some debits have rewards programs. Overall though a credit card is preferred.
A debit card can also be run as a credit card as long as it has a credit card company logo on it like VISA. debit cards will always be useful because you might misplace your money or get robbed if you carry cash only.
I use both debit and credit cards. Pay off monthly balance once a week or every two weeks just depends on the balance. I agree pay off as soon as possible don’t wait until the due date. We don’t buy above our means, have emergency fund and HYS accounts! My husband and I have worked hard to get to this point in our lives ! Our credit score range between 825 and 839 and we are debt free! US citizens but are currently living in Germany, a lot of places don’t accept AMEX so we use our debit card or pay cash. Discipline is the key and don’t buy on impulse! Great video!
I think the real issue at hand is, people view finance as a one size fits all situation. Whether a credit card is right or a debit card, it’s up to the individual to make the best decision for themselves.
All my friends who use credit cards are broke, living paycheck to paycheck and have debt up to their eyeballs. My other friends who use debit cards own homes, have investment nest eggs and are living their best lives. Not sure if correlated to owning a credit card but I’d rather be in the latter camp.
I don’t think it’s necessarily credit card versus debit card. It’s whether you are disciplined and find out the facts versus undisciplined and not finding out the facts.
According to my anti-virus service, tapping is much less secure than inserting the chip. They also point-out that 90% of hacks they deal with come from scanning dangerous QR codes.
@@richardfabacher3705 - Which anti-virus service is claiming that and do they have an article online about it? (any search terms we can use to find their article?). According to various websites (such as CNET, Wallethub, or CapitalOne), tapping/contactless is as safe or safer than chip since the card or device has to be less than 2 inches from the terminal. Mobile wallets like Apple Pay or Google Pay use similar contactless technology so if tapping were less secure then wouldn't we hear more about why? Swipping is, of course, not so secure anymore as it's vulnerable to skimmers for the magnetic stripe. Chip cards are more secure than the old stripes but there's a rise lately on what's called "shimming" and according to a November 2024 Bankrate article: "Shimming uses a thin reader called a “shim” that fits into a card reader slot at a retailer or ATM. These shims contain a microchip and flash storage that can capture and save your card information from your chip card." (article is titled "Can chip cards be skimmed?") QR codes are an entirely different technology/concept and don't involve the RFID and NFC technologies in tapping/contactless payments.
I got a credit card at my bank. I put ALL my monthly expenses on it and pay it off in full at the end of every month. The main advantage was so I would not have " due dates" for all my bills scattered all ever my calendar that I had to keep up with. That, and auto pay for those bills, made my life less stressful. I had ONE bill to pay every month, my credit card bill. I don't travels so all those air miles meant nothing to me. Here was the surprise. I get 1.5 " points" for every dollar I spent on my CC. I never gave it much thought, then one day, my bank and I were talking , and they said I had 80,000 points. Ok, so what? Oh, you can trade them for cash. That was an easy $800.00 or so dollars! Add the fraud security, and it's a no brainer.
I am very disciplined, pay my cc card off faithfully every month and benefit from the cash back and rewards on the CC. I have never used a debit card in my life and most likely never will. Paying no interest and having better protection by using the cc is better for me and my choice. I have never paid cc interest in my life. Larry, Central Valley, Ca.
Cash or Debit cards only for me. Got out of debt at age 36. Will never use a credit card ever again. I'm 61 and been a cash or debt card person only. My credit score shows N/A and I don't care. I'm debt free, I pay cash for all my used cars and I own my home out right. Debt is evil, there is no such thing as good debt.
I use a single credit card for everything. Get 5% back on gas and restraunts, 3% on groceries, costco, utilities, and 1.5% on everything else. I get back roughly $2.5k each year.
The fact there are tons of people who don’t have credit cards, but are in debt with cars, homes, or other loans proves it doesn’t matter, a financially irresponsible person will always be financially irresponsible, with or without a credit card.
Nope. Using cash means I can only use up what I have in my bank account. With credit cards I can borrow up to my credit limit which is more than the average person has in his bank account
CC is my preferred method of payment also my default. I’ve been doing so since I was 18 in college and got my first credit card. I have always paid off my account balance at the end of each billing cycle, no fees at all. I now have maybe six credit cards, but only actively use three for different things. One is for my main purchases and the others are for stuff I need on the side. I have all of them on auto payments coming from my checking, so the only thing I really need to manage is to have enough money in my checking to pay for everything. And the rewards that come with each card is just icing on the cake.
@@TheThreatenedSwan I disagree that it’s shorthand. It’s misdirected. It treats the symptom instead of the root of the issue. It blames the object instead of the actions taken by the individual. Would be more beneficial to fix the flawed psychology, then to limit one’s options.
The idea behind it is greed. Look up some old documentaries on credit cards and how it started and why. Banks consider people who use their credit card wisely deadbeats (actual term) and don’t like them. They prefer people who overspend and pay interests as that is what makes them billions. All the benefits are meant to lure people into the trap and sadly most people fall into and can’t get out easily.
At one point I remember telling myself I’ll spend a certain amount on my card and pay it off at the end of the month. I wouldn’t even look at the balance I would spend til the card stopped working then I would pay it off. I didn’t make enough money to do this as much as I did and I fell behind on paying all of it off. Eventually I maxed it out and left it there. I found out that it really does take discipline to have credit cards.
Credit cards are incredibly useful because they pay you reward for spending money on it so as long as you know how to use it. Travel cards are a flex for myself personally.
At one point, I did use debit cards but eventually I started using a credit card on larger purchases such as college tuition and paying them off before interest occurred. Now I only use credit cards all eligible purchases. Unfortunately payment such as mortgage local natural gas company bills are not able to be paid on the credit card unless you pay service fee Which is usually about 2% therefore I don’t make payments through my credit card on those bills.
A very comprehensive view. Personally I handle things the way you do with the except of dealing with emergencies which might require handling debt for a month or two. Unfortunately extreme emergencies can and do happen.The important thing is to tackle the ASAP. The ultimate goal is to not carry any debt. when ever possible.
I listen to Dave Ramsay mostly. I disagree fully with his stance on credit cards. I hate when he uses the “not one millionaire I interviewed said they did it with credit card points”. We all know that, we don’t use them to become rich on points but they are nice little discounts on a spend that we were going to make anyway. If I can choose to buy something at full price with my debit or get 5% back on a credit card, I am choosing the 5% discount every time. I have zero debt and an amazing credit score because I know how to budget and use my credit to my advantage. I create monthly budgets and I only spend what I budget on credit and pay it in full every month.
Debit cards are not entirely useless, I wouldn't say that. They have their purpose. Sure, they usually don't reward you with points from your institution, but many cash-back apps do accept debit card transactions for point accumulation. Furthermore, just having a debit card payment gives you peace of mind of having something paid off immediately as opposed to accruing it on a credit line. You get it over with! Lastly, many money orders will waive fees if you use a debit card, and at times merchant fees/surcharges aren't charged to debit cards.
I used to have 12 credit cards. Now I am down to 8. I mostly use my main 2 credit cards for gas, restaurants and groceries. I get 3-4X points back in these purchases. I pay off these purchases weekly. I also use my debit card sometimes as needed. Both have different use cases. Thanks for all the great videos you put out!
I swapped all expenses in my business to credit cards aside from loans. It was brilliant; right off, the bank account became 100% easier to wrap my mind around and track overall expenses. And that’s just scratching the surface
I usually look up your videos for updates! Our government has no idea how people are suffering these days. I feel for people with disabilities not getting the help they deserve. Thank you Mrs Emily L Romano, imagine investing $12,000 and received $305,500.
Mrs Emily L Romano was my hope during the 'bear summer' last year. I did so many mistakes but also learned so much from it, and of course from Emily L Romano.
the first step to successful investing is figuring out your goals and risk tolerance either on your own or with the help of a financial professional but is very advisable you make use of a professional
I really like that he hit on the credit score, everyone I hear is always talking about rewards….if you spend over a certain amount of your limit it will lower your score, doesn’t matter if you pay on time in full. With a debit card I’ve never had a problem with getting back my money that was fraud, with a credit card I have.
A savings account doesn't have card functionality (here in the UK) so how can anybody access a savings account when it's a different account from that of your debit card.
@@chipwanderlust113 Many people use Money Market savings which has the option of writing checks or having a debit card. Also, overdraft protection can be set up to cover overdrafts by drawing from savings. Finally, with some mobile banking it is possible to access anything. If you can deposit by phone into both savings and/or checking, all your accounts are synced: have fun.
I'm in Canada. I think most savvy savers who get a higher cashback CC with an annual fee need to do the math to find the breakeven spend amount compared to a basic no annual fee cashback CC. Too many don't realize that by paying the annual fees, the perks you get is less than if you bought everything with a no annual fee cashback CC. I also heard of someone taking a huge risk which paid off. He spent more than he could bear with a CC on an investment. Then he transferred the balance to another card at a very low interest rate (avoiding the high interest rates). When his investments were up, he cashed out, paid off his balance and pocketed the earnings.
I use a Debit Card. I hate Credit Cards(CC); you pay twice, once when you make the purchase itself and then again when the CC statement arrives. The banks really want you to use CC making it easy to use while making large purchases with Debit Cards harder all so you can end up making interest payments. The bank likes to use fraud protection as an excuse but the fact is your Debit card offers nearly as much fraud protection as the Credit Card. Contrary to the comercials on TV, CC companies are not always that eager to refund you your money when you've been a victim of fraud.
I’ve used credit cards for over 40 years, and I’ve always found the credit card companies very willing to help me dispute a charge or question a charge or put a stop payment on the charge until it was figured out.. Every single time.
Credit Card for most purchases, Debit card for pulling cash from the ATM, and cash for local businesses that benefit from not getting hit by large transaction fees. As one major example, my barber charges 30% less when I pay with cash instead of a debit or credit card.
I am a person who really likes my debit card. I know some people might need a credit card, but the debit card works best for me. A lot less work involved. I so love simplicity.
@@GlitterSn1ffer it’s just impossible not to have late fees etc, replace with credit card, same convenience, but you keep your money till the end of the month and pay in one bulk payment, when you use debit card say pay for gas, they place a hold for $100 then charge you say for $50 so really $150 hold for $50 of gas until the hold falls off, then you end up being in the red, subject to late fees, Also if there are any fraud charges they come direct out of your account with debit card so money is essentially gone,with credit they aren’t paid so you have more time to contest and stop payment,
Good advices. Credit card is like a no interest loan for a short period. I pay off a week before due date. Like you said, do not spend what you do not have is the best advice.
If you are impulsive -- and paying with plastic is too easy for you -- then a debit card is much worse than a credit card. You're likely to run out of money before you run out of month. Then you'll have to borrow (possibly on a credit card) to pay everyday expenses.
One of the overlooked factors. Refunds and fraud. When you dispute a debit card charge - you begging the bank or business to give you back your money. With credit - you refusing to pay. I know it’s subtle. But there’s a huge difference. Banks are not incentivized to return your money.
I have one credit card I use, and pay off the balance every month, but I mostly use a debit card for routine purchases such as groceries and gas for my car. I've had some fraud on my debit card, and my credit union has always taken care of it promptly. I've had credit card debt in the past, and it felt so good to have everything paid off. You can spend a coin anyway you want, but you can only spend it once. That is my motto. Makes me think twice buying something on impulse :-).
I get 6% cash back on groceries, 5% on all utilities, Amazon, Target and 3% back on gas, online purchases and restaurants & 2% back on everything else. Glad debit works for you but I make enough cash back every year to buy most of my Christmas presents. I’m debt free.
@@MKK-wg7fz are u using the Blue Cash Preferred credit card? 🤔? or are u using the chase amazon prime credit card? Nevermind u are using the US bank cash plus credit card 😌 good choice 👌
Great advice. But I'd add one advantage to using cash: Small businesses really appreciate it. Credit card processing takes a portion of the sale away from the retailer. A major retailer can negotiate an extremely small fee for this since they do so many transactions. A small business is paying a higher fee. Once I withdrew a few hundred dollars from an ATM to pay for a car repair; the garage owner said he really appreciated a cash payment and gave me a substantial discount.
I never use a debit card, unless that's my only option. I ALWAYS use credit cards because of the points. BUT that is only because I always pay off my balance every month. If you don't have that discipline, then you should only use a debit card. I started with Dave's advice, but I think he's wrong when you have a lot of money and you can pay it off.
Credit card whenever i can and only money i know i have. But pay attention to transaction fees when using them. For example My town passes on a 7% processing fee when using any card to pay my water/sewage/trash. So i’ll pay more then i would get back on 2% rewards. Therefore i opt for bill pay through my bank which only costs me $0.30 processing fee for an E-check. I’m also a person who habitually pays off the entire balance everyday while having a morning coffee unless i spent nothing the day before. Glad to know others pay off frequently as well and I’m not too crazy
@@jaredgates4310 ngl that is a big amount of money, but per year, does that really account to much? Genuine question btw. I mean isn't that just two months of fixed expenses Like rent and food etc
The other advantage is security. If my credit card number is stolen. The money can be refunded nearly instantly. If my debit card is stolen it's not nearly as easy to get that money back once it's been pulled out of your account.
For me, we've tried using credit cards on our normal purchases but I'm not good with them and I overspend. So we stick to debit cards, that's just us though.
The average annual salary in the US is 80k. If you don’t make twice that I don’t recommend using credit cards. To own a home you must make 120k to afford the average home mortgage payment. Most people do not have the disposable income to utilize the points on credit cards effectively. It’s not a control issue it’s a predation issue.
Security wise, my debit card is the most secure because it usually asks for the PIN number to make the transaction. I’ve never used it online or at a gas pump. It currently doesn’t have the tap feature but it might on my replacement card. My credit card and cash can be physically stolen and used with no problem. Of course, as long as I report the card stolen, it can be shut off and I’m not responsible for any transactions that went through.
Ramsey channel is not about getting $300 a year, it is about long term wealth building. The most important part he says about credit cards is not only the danger, but also that reaping rewards is simply not the path to wealth. It is a distractor that you can put too much mental power into. Nobody became a millionaire from reward points
Especially because, to earn those rewards, you have to spend quite a bit as well. I guess credit cards are for people who were going to spend that money in the first place and who are financially well off to begin with. For people in debt, the Ramsey method is great.
I get on average 950 a year in cashback. Compound over 25 years and that's 46k with a meager 5% ror. Am I rich? No. But it's nothing to sneeze at either.
In that case, it makes complète sense. Where I come from (France), we don´t have that system and where I live now (Korea), the crédit card system would like me to spend a certain amount of money that I wouldn't normally spend, and on certain categories/ places that I have no interest in, in order to get perks, so I don´t see the point.
As a foreigner living in Japan, getting a CC here is ridiculously hard. Luckily, Japanese debit cards give points, which can be converted into yen. Also, there are no minimum balances required in Japanese bank accounts.
I spend less when using cash or debit cards. I understand the whole points and miles thing, and the protections with credit cards. But my life is simpler when I don’t have to worry about payment dates and possible interest.
I love my cc and I pay it off right away like you do. It helps with knowing how much I am spending and helps my credit score too. If I happen to have any balance on the day they run my credit score then it will be 2 pts lower. My debit card has an Overdraft Protection Loan so it would be possible to spend more than I have anyway. Most of all I love being debt free! I do feel that a majority of people are better off not using a credit card, when I was younger I sometimes would carry debt for a month or two. I grew up thinking it was a normal thing to do but thankfully figured out on my own that it was not beneficial.
Dave Ramsey gives advice to people with zero mental fortitude and denegerates who cannot emotionally handle access to money. Graham Stephan and Humphrey give advice to people who have head-knowledge and can apply it without influence from mental issues.
I cut up my credit card after I built a credit rating back in my twenties. It was difficult for a while to transition to a debit card, however it's the best financial decision I ever made. I'll never have a credit card again. - Unlike this guy, I own my house, and don't rent. To me this whole credit card merry go round is like watching a dog chasing it's tail. - I worked for an airline, so I'm not looking for any frequent flyer or credit card points. It's a mug's game.
Amazing video, but I think you forgot that most credit card companies charge a small fee to retailers for transactions. That's part of the reason Amex is sometimes not accepted: they have a higher fee than most.
My credit card allows me to stay at big fancy hotels and resorts I could not afford on my own. I travel a lot, and between the hotel points and “free nights” they dole out every year, I save thousands. I pay my balance off the day each transaction posts, and pay strict attention to promotions in order to maximize the points I get on ordinary purchases. And most of all, I never use my credit card unless I have the cash to pay it off that very day.
I used to charge everything on my elite CC to keep track of my spending via the monthly statements, and for the travel perks & cash back, etc. Now, I still have that CC, but I am back to using cash for everything. Your video about the Chinese using cash reminded me of my Chinese granny and the old world ways & wisdom about money.
Love it! I’d love to see a video more in depth of using different credit cards to pay expenses (while paying it off in full) instead of a debit card to maximize their perks. Thanks 🙏🏽
Thanks for your interesting video. One advantage of transacting with a credit card is that your bank account is safe and protected. Nothing comes out of your bank accounts until you make a payment to the credit card company.
I started my credit journey at 17. Paid thousands in interest due to reckless spending in my early 20s but at least I learned. I'm 31 now with a mortgage and an 820 fico. It's all about discipline!
I totally agree with you. Use credit card wisely. Don't be its slave. With well planed purchase and discipline to pay off credit card, you can manage your finance and monthly payment. I prefer to pay grocery purchase and other bills via credit card. This way I know how to plan my next month money spending while I feel safe to have some cash in my account for a current month. Plus some credit cards offer cash back which is a reward you gain back after spending like you pay $300 for grocery then you get $6 back like getting a discount. These are things that debit card will never have.
I'm over 70. I use my credit card for online purchases and pay it off well before the due date. I usually use my debit card for groceries. And I usually use cash at restaurants because it gives me the satisfaction of helping to keep the 'cash' system going which gives me the feeling of anonymity from 'big brother'.
My wife and I only use credit cards, and she has set our cards to use as to which category will give us back the most cash back rewards. We do not use any credit cards that charge an annual fee. We also pay-off any balance that we incur, regardless of the amount when it is due and sometimes before it is due. We do not make any minimum payments thus no finance charges or late fees. Therefore, we consider ourselves a credit card’s worst nightmare. I’ve also noticed that when I’m in line to pay for a purchase that some people who use their debit cards don’t ask or wait for a receipt. I wonder how they keep their books in proper order. I also wonder how many of debit card users have either poor or no credit.
We really all should be using cash instead of ANY cards. Every transaction we're charged an extra 3% on all puchases just for using plastic. This increases prices on everything
Good vid. You didn't talk about cash though; I thought you were going to. I use cash about everywhere I shop locally. The primary reason is that it is not traceable. Yeah 'they' have ways of knowing where I went but they have no clue what I bought On the downside, to be fair, if someone robs you or steals your wallet that money is gone. One HUGE disadvantage of debit cards is if the bad guys get into your account and steal your money there is no getting it back. Banks will not reimburse you like a credit card would do if the same thing happened. Credit cards are much safer overall. They do have one significant flaw, which is the same with a debit card. Both are electronic payments. Which means that most cc companies can and will watch what you buy and sell that information to retailers.
I use credit cards at every opportunity to charge. I receive 2% cash back as incentive. My typical charges total $3000 a month or $36,000 annually. This provides around $700 cash back a year. It pays my cable bill in concept. I pay off total twice a month. That keeps me debt free. FYI, fico is 846. Ramsey is right but I have the disciple to live well below my means. Not all do,
I agree but if we look at the numbers. Credit card debt is astronomical in this country. So its fair to say most of the country should not use a credit card.
This is great information. I'd like to fully transition to using my CCs for all of my spending, but I've often dreaded the feeling of not having some cash on hand or available for usage. I like the idea, but there's an entire mind-shift that comes with this
I almost only use credit cards. Always pay the balance in time and never pay interests. Have been doing this for 6 years now, and it pays vacation( for my family every year(with the points I earn on my cards). This year we flew business from Europe to Mexico. Normally I would have to pay upwards of $10.000 for these tickets, but thanks to my credit card spending, it only cost me taxes and fees to the airline company. Saved approximately $9000. So if you have the discipline, use credit cards. Use them smart and enjoy the perks they give you :)
Unless you have a debit card that offers cash back, didn't hear that covered in this video. I do agree that it's sometimes better to use credit card because of the feeling of security.
I use credit. I used to pay in full every week or so, but then I got married and inflation happened while I try to save to buy a new house, and now I pay off as much as I can at any point to not get not get interest (because interest on my cards is calculated based on if it was over 30 days or something). I only have about 3K on balance at any given moment and have far more than that in savings, it's just my way of getting myself to say "no, don't buy more now just because the card balance is zero" because that does sometimes happen.
Keep an accurate record. Treat it like a checking account and maintain a check record. Your debit is just an alternative to writing a check so it should be record in the check register. A credit card register keeps track of what is going to billed.
I love your videos! I use a credit card and pay the balance off every month. 35 years ago I did not know how they worked and got into credit card debt. It has been over 25 years since I have ever carried a balance. I have a spreadsheet that I use to track my balances and determine the due date. I pay partial payments in lump sum every two weeks so I don't dread the official payment due date. While Dave Ramsey has good intentions on not using credit cards I think his followers actually pay more for insurance. I live in Southern California and things are so pricey here that I want rewards when I can get them. I do not own a debit card. I still have a ATM card to use when I need to take some cash out. It should be noted that more businesses are choosing plastic over cash because cash must be kept in a safe place and deposited into a bank (labor).
This only typically applies in North America and the UK. Credit cards have no rewards in most other countries of the world. Many countries also impose legal restrictions on who is entitled to receive credit.
What do you guys use? Let me know in the comments...
I got robbed 3k off my debit card for concert tickets being extremely careful with it. It was a whole ordeal, missing scheduled payments while making transfers, and getting reimbursed luckily. Compare that to the no liability credit card, it can be reversed in minutes. I have the 2-5% rewards cards and never carry, but the 'free money' is not why I use it. It is purely to reduce my liability. I completely believe that credit cards will influence you to spend more and that you are one step away from disaster, the studies and stats on this are pretty clear.
Can you explain when interest starts accruing on a balance? For example, I pay off my balance every two weeks and I don't think I am paying any interest. I will also pay more than I owe so that I have a negative balance. Is this a good idea?
I only use credit cards. Unless there is a big purchase and they charge 3% credit card fee. I'll use case and ask for 3% for using cash lol
How many credit cards do you use at the same time? My issue with playing the rewards game is that you have to keep track of multiple cards.
I only use credit card, have had fraudulent charges and it just feels far less risky when it’s on credit card and easy to fix. I only use my debit card if I need to make some kind of deposit or something at the bank, just to make sure it’s always the right account… one time they deposited into the wrong account and luckily I caught it by looking at the receipt even though it was correct on the slip… never did it manually ever again.
Edit: I do 2% on all purchases… 2% off everything I purchase… with kids, this makes a huge difference.
It's simple:
If you're saver, only use credit cards.
If you're a spender, don't even apply for credit cards.
Great way of looking at it.
Credit cards transfer money from customers who don’t use them to customers who do. It’s one of the many ways in which life is far more expensive when poor.
-cash back rewards are paid for from the small cut of the transaction that is taken from the vendor with each credit card use
-this added cost to stores is passed on to ALL customers, not just to those who pay with credit cards
If you have a well funded emergency fund, you could still be a spender and have a credit card. Makes you a bit of a saver but doesn’t mean you’re maximizing savings for retirement, HSA, etc
Yes
If you know what are doing that can pay off their credit card every month or just super rich, use credit.
Poor people or no Self control, use debt card.
You can use credit cards as long as you pay it off that month. Advantage is you get reward points and travel points. Disadvantage if you're a compulsive buyer you might max out your cards. I am debt free.
Yup, never buy something "for the points". Just use credit cards to buy things you normally would buy and you'll be good.
@@RyChOr2005 For me the cash back is a bonus and not the reason to buy, but I travel constantly for work. I've spent more time dealing with stolen debit card numbers than I have with credit cards themselves. There is extra security from the credit card itself.
It doesn't change the way I spend money, but for purchases I need to make anyway, a little cash back is better than none. I actually use the Apple Card and the one time it was compromised I found out that by the nature of it's design I did not need a physical card replacement to change my card number. It's now the only card I use while traveling and nearly every purchase I make as long as Mastercard is accepted. I do keep a Visa card for retailers that don't accept Mastercard.
I'm debt free too but nobody will give me credit because I don't own money to anyone and never have....
And make sure you have income in order to actually be able to pay off the card
@@Stylez-13you would be able to get a credit card no problem, its just that you will have to start off with a very small credit limit and will have to work your way to increasing it about every 6 months
Credit card are good if you treat them like debit cards. Pay it off every month and cashflow them every month.
I’ve used credit cards for 99% of my purchases since I was 20 or so.
Never paid interest, never out of my means. 810+ credit score.
All the cash back rewards. 😎
Nice
If you're not going to pay interest, what do you get out of 810 credit score? A star from your teacher?
@@the-space-wiz Not paying interest on the credit cards.
Doesn’t mean I don’t/won’t use my credit score for housing or cars.
@@rig85 Use cash. If you pay off a car loan, your credit score drops.
If feels good not paying interest on my credit card too(most of the time). In all my years of using cc's I believe i only paid about 300-400$ on interest. But I was foolishly close to my limit all the time so I could never really build my credit. Im a believer that If I dont have at least 50% of the purchase cost on hand(considering all bills are paid and money in long term savings) I cannot afford what I want.
I've been hacked 3 times, with the lastest having all my savings drained because I used a debit card at a gas station. Using a credit card, your money is not at risk for fraud.
Yep, fraud prevention. Until they get debit policies in line with the high risk in today's world then I will be spending their money.
They do visa policy aplies to debt cards and credit cards
@@johnconner8437 It took the bank 6 weeks to return my stolen money while I still had bills to pay. And I had to be proactive in disputing the faulty transactions, while with a credit card it's easier to dispute and they do most of the work.
This!
I go with that same rationale.
In my own circle of friends, the ones who get into credit card debt have much more going on in their lives that just overspending. They have health issues, self-esteem issues, employment issues, family that sucks they dry, drinking problems, partying too much, not giving a crap problem, and definitely math and not knowing any better problem.
All self destructive behaviors that majority of Americans seem to have. Little ability to discipline themselves
As a general rule, I agree with David in that most people should avoid credit cards. I’ve used them responsibly for years, however I have made some bad choices in the past by getting services now instead of waiting until I had the money. I’ve also had buyers remorse having used a credit card when I wouldn’t have made the purchase with cash at the time. Also, when I use the debit card I see that balance go down immediately and it causes me to be more conservative with my spending.
People often seem to forget that swiping a debit card is just as emotionally painless as swiping a credit card. The whole "credit cards make you spend more" argument applies to debit cards as well. People also seem to forget that if you stick to a budget, the way you pay for stuff doesn't really matter. So you might as well get 2% back on everything.
the people who dont need to see this video are people who got their finance under control so it dont matter which for of payment they use. the people that need to see this type of vids are the people that is part of teh $1.4 trillion CC debt.
Nah. If I have 3k in my account and my insurance payment is due, I am not going to get down to the danger zone but if I know I have 3 credit cards with 10k limits and I can if needed carry the balance then I will never not be able to pay bills that require debit. It's the feeling of the remaining access to funds.
@yia01 I have 10 credit cards n im not in debt 😌😌
Nahhh. If u have $100 in ur checking, going out to eat is much more painful on a debit card than on a credit card.
@@ToboeKey309wow congrats, lmfao
I understand your points, but I cannot be trusted with a credit card based on my past history. When things are good, I forget to pay things off; when things are not so good, I spend too much. I am the big dumb.
thats completely fine, they are not for everyone and theres nothing wrong with that just like any one given diet isn't perfect for everyone
You're selling yourself short and resigning yourself to being - in your words - "dumb." You're smarter and better than that.
Awareness is the path to enlightenment - made this up
At least you’re honest with yourself 👍
Not dumb if you recognize it and take steps to avoid situations that mess you up!
I racked up about $18K in credit card debt. First thing I did was stop using credit cards, transferred it to a 0%, and went all cash with a debit card. Down to $2500 and once that’s done will have no consumer debt at all. Will once again have control of my full income to devote to e-fund and investing.
I had even more than that in CC debt. I just didn't pay them and saved myself a lot of money.
@@the-space-wiz How's that wrecked credit rating working out for you?
Fund an emergency fund before you get a credit card.
Credit card is emergency fund
@@eile4219That’s a very risky idea.
@@eile4219 Those are some dangerous words there LOL. You have a painful lesson ahead with that mindset.
It’s *so* easy to whip out that credit card in an emergency you’re not financially prepared for.
@@TVHouseHistorianand then you have another emergency a month later😂
With debit cards, what worries me is that it's linked to your bank account and if it's stolen, it takes at least 2 weeks to get your money replaced from the bank.
It depends on the bank. This happened to me with a credit union once and the money was replaced that same day.
Or maybe not get reimbursed at all.
@@AmericanWearswhat credit union?
@@topboygamer3140Navy FCU, Fort Bragg CU though they changed the name it will always be Ft Bragg like the base
mate, if someone can get your card details and steal all your money to the point you can't live for 2 weeks. you are doing finance very wrong.
every bank account has a savings account and a personal account, put most of your money in the interest account and only have what you need. I'm with Ubank and they allow up to 10 accounts for free. I have a savings account just for holding the money for that week, a savings account for actual savings and then an account for bills to withdraw and an account for my personal spending. all my money goes into the savings account for holding my money and I transfer it from there. if someone got my card details they would get a maximum of $10 cause that's all I keep in my savings account. since all bank accounts are free to have nowadays I then set up a second bank with my emergency fund, that way it's easy to access when I need it but it is out of sight and out of mind, getting me interest every month.
I don't have debit card. I called the bank to remove the debit function.
I only use credit cards and never keep any balance.
Smart! I do the same. I used to work at a bank.
One of the Ramsey points is that they believe the points are “scummy” since the reason they offer them is because someone isn’t able to pay their card and pays interest which allows you to get benefits.
I mean that same logic could apply to the high yield savings accounts they advertise. You only get the interest because someone else is paying a higher rate of interest on a loan.
Same logic with promotional periods for loans. No financial institution gives customers money or discounts out of their bottom line.
That's only half true. Credit card companies make money in more ways just interest on unpaid balances. Amex, for example, makes most of their revenue from interchange fees. And besides that most credit cards are issued in partnership with banks. Banks have many revenue steams, and high interest credit card debt is only one part of that. Even if they didn't make any money from people not paying their credit card balances, they'd be paying out points on credit cards. Sure, it'd probably be at lower percentages, but the points would still be there.
And he makes money off of desperate viewers. So f what he thinks.
It’s also scummy that companies don’t allow you to be fully vested in your 401k until you’ve worked for them for 4+ years, does that mean I should just not donate to my 401k and collect the 4% match of free money?
Dave Ramsey advice is for financially incompetent folks who are deep in debt. If you know you are financially responsible, then there’s nothing to worry about and a majority of Dave’s advice is pretty god awful.
This is where you're wrong. The advice that people who have credit cards spend more is true for everyone. This has been proven to be true. If you get an offer for 5% on a $2000 spend. You're going to find a way to meet that threshold and I can guarantee you more than 5% are going to be spent on items you could have done without.
@@ret4kind got proof to back up that statement? Because my American Express statements say otherwise…and again…if you spend more with a CC but still pay it off every month, why does it matter? I’ve racked up enough points on my card to travel to Japan and back home TWICE and I have never got a late fee or interest payment.
@@ret4kindabsolute rubbish……😂😂
@@PrimitiveAK "if you spend more with a CC but still pay it off every month, why does it matter?"
"if you spend more with a CC"
"spend more with a CC"
"spend more"
Yeah he also prioritizes paying tithing, withdrawing 8% annually on retirement, and constantly downplays financial struggles that young people face that his generation didn't. Bad advice and out of touch.
Ramsey isn't worth listening to unless you're a massively indebted middle aged+ religious person.
Something overlooked is the vendor fees, credit card companies make a significant part of their profit off of charging vendors processing fees! Great video Humphrey as always!
Vendor fees are passed onto the customer, regardless of how they pay. Might as well get the rewards points
1:42 I remember a 60 Minutes show with Moreley Shaffer where his credit card insider guest said guys who pay their balance every month are called "deadbeats" 😂😂😂.
If fraudulent activity happens on your credit card, it's the bank's money that is in jeopardy. If fraudulent activity happens on your debit card then it's your own personal money at risk. Sure, issues could be resolved with your checking account but if the balance gets drawn down it may cause other bills to bounce in the meantime.
That happened to me
Try getting your money back
Good luck
@@Jeff-p5i2w Welcome to the club. And besides the money (The cash gone bye-bye plus over $800 in bounce fees) the time and the hassle is murder and your credit score takes a big ding.
Where I live (the Netherlands) creditcards don't give any type of rewards. The only reason I have a creditcard is for when I'm traveling outside of Europe or if I want to buy something from foreign websites.
Its probably because you have legal laws on how much interest can be collected on credit cards or the culture means everyone is educated on the ways to debts, so no one is dumb enough to buy things they can't afford on revolving accounts with 20% interest rates.
The rewards are there to entice people to buy more and hopefully not pay them off to collect interest, which actually does work on many people.
@@rebeltheharem7028 we do have different rules and laws, also we do not have an american style credit score. Also a culture of not spending more money then you have, altough the younger generations are going for car loans and lease plans, i'm from the 70's we learned to save up before buying something, only a mortgage is acceptable as a debt
I am also Dutch and from the '70's. Indeed do not spend more then you earn and ask yourself the question: do I really need that (item). Most, if not all adults in our Netherlands have a debit card. Most do not even walk around with cash. Or they use their mobile phone. A credit card is good to pay the toll on the highways in Italy and France. Also in our country almost no shops accept them. Shops want to be paid by debit card because it is faster and they do not have to count the money at the end of the day ( costs time) and they can not be robbed because of having cash in the shop. Almost nobody accepts 200 or 500 € bills.
I'm from Barbados and we really only get points and rewards with the high end credit cards(gold,platinum and black cards)not everyone can afford to have those cards.with the normal credit cards,we don't even get any rewards.
@@abelfaber4457Bonus Fact: The Netherlands Banks will lend you more money than what your house is worth (great for the individual, but not so much for their economy) - TH-cam Economist “economics explained”
What you are missing is the transaction fees the merchant has to pay. These are double for credit cards vs. debit cards. All those seemingly great rewards are just a fraction of this additional cost of the products purchased with the card.
The only correct payment method is carrying around a million dollars cash in a metal briefcase with you everywhere you go, but I don't have that kind of money, nor do I own a cool briefcase, so I just use a credit card. I pay it off weekly.
I hope u are paying the full balance 🤣🤣 like I do and I pay the full balance a day before the closing date not due date the statement closing date I hope u kno the fuckin difference 😌😌
@@ToboeKey309 Yeah, I pay off the full balance.
Why pay it off weekly when the grace period is longer? Sounds unnecessary. Who wants to pay bills every week?
@@the-space-wiz Short version is that it keeps me aware of how much I'm spending. I've talked to people who pay it daily.
@@the-space-wiz if you're tracking your finances every week anyway, it's automatic to pay it every week. Takes about 5 min.
I just moved back to using debit. I found myself overspending when using credit card. Not to the point of creating new debt, but just as you said, you have no emotional connection to the swipe.
I want to retain more cash.
This will force me to be more disciplined and get back some control. :)
same
Debit card is also good for the times when some services charge fees if you use a credit card and not a debit also to use withdraw cash at the bank or ATM (excluding using your phone app) and also some debits have rewards programs. Overall though a credit card is preferred.
A debit card can also be run as a credit card as long as it has a credit card company logo on it like VISA. debit cards will always be useful because you might misplace your money or get robbed if you carry cash only.
I use both debit and credit cards. Pay off monthly balance once a week or every two weeks just depends on the balance. I agree pay off as soon as possible don’t wait until the due date. We don’t buy above our means, have emergency fund and HYS accounts! My husband and I have worked hard to get to this point in our lives ! Our credit score range between 825 and 839 and we are debt free! US citizens but are currently living in Germany, a lot of places don’t accept AMEX so we use our debit card or pay cash. Discipline is the key and don’t buy on impulse! Great video!
I think the real issue at hand is, people view finance as a one size fits all situation. Whether a credit card is right or a debit card, it’s up to the individual to make the best decision for themselves.
All my friends who use credit cards are broke, living paycheck to paycheck and have debt up to their eyeballs. My other friends who use debit cards own homes, have investment nest eggs and are living their best lives. Not sure if correlated to owning a credit card but I’d rather be in the latter camp.
I don’t think it’s necessarily credit card versus debit card. It’s whether you are disciplined and find out the facts versus undisciplined and not finding out the facts.
Don't swipe! Instead, tap when possible, it's more secure these days.
US is so behind. I was shocked they still have a strip in their cards.
According to my anti-virus service, tapping is much less secure than inserting the chip. They also point-out that 90% of hacks they deal with come from scanning dangerous QR codes.
@@richardfabacher3705 - Which anti-virus service is claiming that and do they have an article online about it? (any search terms we can use to find their article?). According to various websites (such as CNET, Wallethub, or CapitalOne), tapping/contactless is as safe or safer than chip since the card or device has to be less than 2 inches from the terminal. Mobile wallets like Apple Pay or Google Pay use similar contactless technology so if tapping were less secure then wouldn't we hear more about why?
Swipping is, of course, not so secure anymore as it's vulnerable to skimmers for the magnetic stripe. Chip cards are more secure than the old stripes but there's a rise lately on what's called "shimming" and according to a November 2024 Bankrate article: "Shimming uses a thin reader called a “shim” that fits into a card reader slot at a retailer or ATM. These shims contain a microchip and flash storage that can capture and save your card information from your chip card." (article is titled "Can chip cards be skimmed?")
QR codes are an entirely different technology/concept and don't involve the RFID and NFC technologies in tapping/contactless payments.
I got a credit card at my bank. I put ALL my monthly expenses on it and pay it off in full at the end of every month. The main advantage was so I would not have " due dates" for all my bills scattered all ever my calendar that I had to keep up with. That, and auto pay for those bills, made my life less stressful. I had ONE bill to pay every month, my credit card bill.
I don't travels so all those air miles meant nothing to me.
Here was the surprise. I get 1.5 " points" for every dollar I spent on my CC. I never gave it much thought, then one day, my bank and I were talking , and they said I had 80,000 points. Ok, so what? Oh, you can trade them for cash. That was an easy $800.00 or so dollars!
Add the fraud security, and it's a no brainer.
I am very disciplined, pay my cc card off faithfully every month and benefit from the cash back and rewards on the CC. I have never used a debit card in my life and most likely never will. Paying no interest and having better protection by using the cc is better for me and my choice. I have never paid cc interest in my life. Larry, Central Valley, Ca.
Cash or Debit cards only for me. Got out of debt at age 36. Will never use a credit card ever again. I'm 61 and been a cash or debt card person only. My credit score shows N/A and I don't care. I'm debt free, I pay cash for all my used cars and I own my home out right. Debt is evil, there is no such thing as good debt.
I use a single credit card for everything. Get 5% back on gas and restraunts, 3% on groceries, costco, utilities, and 1.5% on everything else. I get back roughly $2.5k each year.
what card?
@DarkRahl69 I just have a credit card through a local credit union.
I agree 100%.
Using credit card only.
The fact there are tons of people who don’t have credit cards, but are in debt with cars, homes, or other loans proves it doesn’t matter, a financially irresponsible person will always be financially irresponsible, with or without a credit card.
Nope. Using cash means I can only use up what I have in my bank account. With credit cards I can borrow up to my credit limit which is more than the average person has in his bank account
@@robocop581 You missed the point entirely.
Credit card debt is also the worst form of debt to be in. It's better to be irresponsible with a bb gun than with a pistol
CC is my preferred method of payment also my default. I’ve been doing so since I was 18 in college and got my first credit card. I have always paid off my account balance at the end of each billing cycle, no fees at all. I now have maybe six credit cards, but only actively use three for different things. One is for my main purchases and the others are for stuff I need on the side. I have all of them on auto payments coming from my checking, so the only thing I really need to manage is to have enough money in my checking to pay for everything. And the rewards that come with each card is just icing on the cake.
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I'm with Dave Ramsay on this. Credit cards and the entire interest system are destructive to more people than debit cards are.
calling an inanimate object 'evil' is like blaming a pen for misspelled words
Well said.
It's just shorthand. Don't be obtuse
@@TheThreatenedSwan I disagree that it’s shorthand. It’s misdirected. It treats the symptom instead of the root of the issue. It blames the object instead of the actions taken by the individual. Would be more beneficial to fix the flawed psychology, then to limit one’s options.
The idea behind it is greed. Look up some old documentaries on credit cards and how it started and why. Banks consider people who use their credit card wisely deadbeats (actual term) and don’t like them. They prefer people who overspend and pay interests as that is what makes them billions. All the benefits are meant to lure people into the trap and sadly most people fall into and can’t get out easily.
It's like US politicians with their phrase "gun violence".
At one point I remember telling myself I’ll spend a certain amount on my card and pay it off at the end of the month. I wouldn’t even look at the balance I would spend til the card stopped working then I would pay it off. I didn’t make enough money to do this as much as I did and I fell behind on paying all of it off. Eventually I maxed it out and left it there. I found out that it really does take discipline to have credit cards.
Credit cards are incredibly useful because they pay you reward for spending money on it so as long as you know how to use it. Travel cards are a flex for myself personally.
I liked that you pointed out the payment methods, the pros and cons as well as which behaviors were best suited to each method. Great job!!!
At one point, I did use debit cards but eventually I started using a credit card on larger purchases such as college tuition and paying them off before interest occurred. Now I only use credit cards all eligible purchases. Unfortunately payment such as mortgage local natural gas company bills are not able to be paid on the credit card unless you pay service fee Which is usually about 2% therefore I don’t make payments through my credit card on those bills.
The reason they charge the 2% is because that's what they get charged by the credit card. They're just passing their costs on to you
A very comprehensive view. Personally I handle things the way you do with the except of dealing with emergencies which might require handling debt for a month or two. Unfortunately extreme emergencies can and do happen.The important thing is to tackle the ASAP. The ultimate goal is to not carry any debt. when ever possible.
I listen to Dave Ramsay mostly. I disagree fully with his stance on credit cards. I hate when he uses the “not one millionaire I interviewed said they did it with credit card points”. We all know that, we don’t use them to become rich on points but they are nice little discounts on a spend that we were going to make anyway. If I can choose to buy something at full price with my debit or get 5% back on a credit card, I am choosing the 5% discount every time. I have zero debt and an amazing credit score because I know how to budget and use my credit to my advantage. I create monthly budgets and I only spend what I budget on credit and pay it in full every month.
Debit cards are not entirely useless, I wouldn't say that. They have their purpose. Sure, they usually don't reward you with points from your institution, but many cash-back apps do accept debit card transactions for point accumulation. Furthermore, just having a debit card payment gives you peace of mind of having something paid off immediately as opposed to accruing it on a credit line. You get it over with! Lastly, many money orders will waive fees if you use a debit card, and at times merchant fees/surcharges aren't charged to debit cards.
I used to have 12 credit cards. Now I am down to 8. I mostly use my main 2 credit cards for gas, restaurants and groceries. I get 3-4X points back in these purchases. I pay off these purchases weekly. I also use my debit card sometimes as needed. Both have different use cases. Thanks for all the great videos you put out!
I swapped all expenses in my business to credit cards aside from loans.
It was brilliant; right off, the bank account became 100% easier to wrap my mind around and track overall expenses.
And that’s just scratching the surface
I usually look up your videos for updates! Our government has no idea how people are suffering these days. I feel for people with disabilities not getting the help they deserve. Thank you Mrs Emily L Romano, imagine investing $12,000 and received $305,500.
You're correct!! I make a lot of money without relying on the government. Investing in stocks and digital currencies is beneficial at this moment
Mrs Emily L Romano was my hope during the 'bear summer' last year. I did so many mistakes but also learned so much from it, and of course from Emily L Romano.
She must be really dedicated and well trusted for people to talk much good about
the first step to successful investing is figuring out your goals and risk tolerance either on your own or with the help of a financial professional but is very advisable you make use of a professional
I Started with $5,000 and Withdrew profits $89,000
I really like that he hit on the credit score, everyone I hear is always talking about rewards….if you spend over a certain amount of your limit it will lower your score, doesn’t matter if you pay on time in full. With a debit card I’ve never had a problem with getting back my money that was fraud, with a credit card I have.
Don't forget, online purchases. Can't use cash. Exposing your debit card to the Internet isn't safe.
Fraud on a debit card can wipe out your checking or savings account while they investigate for WEEKS. With a credit card it’s on them.
A savings account doesn't have card functionality (here in the UK) so how can anybody access a savings account when it's a different account from that of your debit card.
@@chipwanderlust113 Many people use Money Market savings which has the option of writing checks or having a debit card. Also, overdraft protection can be set up to cover overdrafts by drawing from savings. Finally, with some mobile banking it is possible to access anything. If you can deposit by phone into both savings and/or checking, all your accounts are synced: have fun.
Debit for the day to day, credit card for routine bills
I'm in Canada. I think most savvy savers who get a higher cashback CC with an annual fee need to do the math to find the breakeven spend amount compared to a basic no annual fee cashback CC. Too many don't realize that by paying the annual fees, the perks you get is less than if you bought everything with a no annual fee cashback CC.
I also heard of someone taking a huge risk which paid off. He spent more than he could bear with a CC on an investment. Then he transferred the balance to another card at a very low interest rate (avoiding the high interest rates). When his investments were up, he cashed out, paid off his balance and pocketed the earnings.
I use a Debit Card. I hate Credit Cards(CC); you pay twice, once when you make the purchase itself and then again when the CC statement arrives. The banks really want you to use CC making it easy to use while making large purchases with Debit Cards harder all so you can end up making interest payments. The bank likes to use fraud protection as an excuse but the fact is your Debit card offers nearly as much fraud protection as the Credit Card. Contrary to the comercials on TV, CC companies are not always that eager to refund you your money when you've been a victim of fraud.
I’ve used credit cards for over 40 years, and I’ve always found the credit card companies very willing to help me dispute a charge or question a charge or put a stop payment on the charge until it was figured out.. Every single time.
I can't believe I am goinh agree with David Ramsey. But he is correct in this occasion
Credit Card for most purchases, Debit card for pulling cash from the ATM, and cash for local businesses that benefit from not getting hit by large transaction fees.
As one major example, my barber charges 30% less when I pay with cash instead of a debit or credit card.
Sleezy for that barber to essentially charge 30% more to people with a credit card, instead of 3%
@@soapa4279 It's called "under the table."
That 30% goes to taxes on documented transactions.
I am a person who really likes my debit card. I know some people might need a credit card, but the debit card works best for me. A lot less work involved. I so love simplicity.
Yup debit cards are evil, I exclusively use credit cards
haha
Why are they evil?
@@GlitterSn1ffer it’s just impossible not to have late fees etc, replace with credit card, same convenience, but you keep your money till the end of the month and pay in one bulk payment, when you use debit card say pay for gas, they place a hold for $100 then charge you say for $50 so really $150 hold for $50 of gas until the hold falls off, then you end up being in the red, subject to late fees, Also if there are any fraud charges they come direct out of your account with debit card so money is essentially gone,with credit they aren’t paid so you have more time to contest and stop payment,
Good advices. Credit card is like a no interest loan for a short period. I pay off a week before due date. Like you said, do not spend what you do not have is the best advice.
If you are impulsive -- and paying with plastic is too easy for you -- then a debit card is much worse than a credit card. You're likely to run out of money before you run out of month. Then you'll have to borrow (possibly on a credit card) to pay everyday expenses.
One of the overlooked factors. Refunds and fraud. When you dispute a debit card charge - you begging the bank or business to give you back your money.
With credit - you refusing to pay.
I know it’s subtle. But there’s a huge difference. Banks are not incentivized to return your money.
I have one credit card I use, and pay off the balance every month, but I mostly use a debit card for routine purchases such as groceries and gas for my car. I've had some fraud on my debit card, and my credit union has always taken care of it promptly. I've had credit card debt in the past, and it felt so good to have everything paid off. You can spend a coin anyway you want, but you can only spend it once. That is my motto. Makes me think twice buying something on impulse :-).
And if that point of sales machine let's u use debit as credit chose that option so u don't have to enter your pin number 😊😊
I get 6% cash back on groceries, 5% on all utilities, Amazon, Target and 3% back on gas, online purchases and restaurants & 2% back on everything else. Glad debit works for you but I make enough cash back every year to buy most of my Christmas presents. I’m debt free.
@@MKK-wg7fz are u using the Blue Cash Preferred credit card? 🤔? or are u using the chase amazon prime credit card? Nevermind u are using the US bank cash plus credit card 😌 good choice 👌
Great advice. But I'd add one advantage to using cash: Small businesses really appreciate it. Credit card processing takes a portion of the sale away from the retailer. A major retailer can negotiate an extremely small fee for this since they do so many transactions. A small business is paying a higher fee. Once I withdrew a few hundred dollars from an ATM to pay for a car repair; the garage owner said he really appreciated a cash payment and gave me a substantial discount.
I never use a debit card, unless that's my only option. I ALWAYS use credit cards because of the points. BUT that is only because I always pay off my balance every month. If you don't have that discipline, then you should only use a debit card. I started with Dave's advice, but I think he's wrong when you have a lot of money and you can pay it off.
Never take advice from Graham. Shady guy who was never punished for selling the SBF debacle.
His name makes me puke. I'm glad I stopped watching his videos.
Now I just watch Money Guy, Humphrey, Whiteboard Finance, and Jasprit.
Credit card whenever i can and only money i know i have. But pay attention to transaction fees when using them. For example My town passes on a 7% processing fee when using any card to pay my water/sewage/trash. So i’ll pay more then i would get back on 2% rewards. Therefore i opt for bill pay through my bank which only costs me $0.30 processing fee for an E-check. I’m also a person who habitually pays off the entire balance everyday while having a morning coffee unless i spent nothing the day before. Glad to know others pay off frequently as well and I’m not too crazy
The rewards are tbh so low that I really don't see a big enough reason to have a credit card.
I get back roughly $2.5k in cash each year. Everything I buy goes on the same credit card.
@@jaredgates4310You probably spend at least $80k a year on that credit card to get that much in cash back. Most people don't.
@@jaredgates4310 ngl that is a big amount of money, but per year, does that really account to much? Genuine question btw. I mean isn't that just two months of fixed expenses Like rent and food etc
The other advantage is security. If my credit card number is stolen. The money can be refunded nearly instantly. If my debit card is stolen it's not nearly as easy to get that money back once it's been pulled out of your account.
@@jaredgates4310 ok that sounds like an actual good reason ty, didn't know that
For me, we've tried using credit cards on our normal purchases but I'm not good with them and I overspend. So we stick to debit cards, that's just us though.
The average annual salary in the US is 80k. If you don’t make twice that I don’t recommend using credit cards. To own a home you must make 120k to afford the average home mortgage payment. Most people do not have the disposable income to utilize the points on credit cards effectively. It’s not a control issue it’s a predation issue.
Security wise, my debit card is the most secure because it usually asks for the PIN number to make the transaction. I’ve never used it online or at a gas pump. It currently doesn’t have the tap feature but it might on my replacement card. My credit card and cash can be physically stolen and used with no problem. Of course, as long as I report the card stolen, it can be shut off and I’m not responsible for any transactions that went through.
Ramsey channel is not about getting $300 a year, it is about long term wealth building. The most important part he says about credit cards is not only the danger, but also that reaping rewards is simply not the path to wealth. It is a distractor that you can put too much mental power into. Nobody became a millionaire from reward points
Especially because, to earn those rewards, you have to spend quite a bit as well. I guess credit cards are for people who were going to spend that money in the first place and who are financially well off to begin with. For people in debt, the Ramsey method is great.
I get on average 950 a year in cashback. Compound over 25 years and that's 46k with a meager 5% ror. Am I rich? No. But it's nothing to sneeze at either.
@@Raphanne It's money that I'm going to be spending anyway, so why not get the rewards dollars? It's free money and not taxable.
@@RaphanneMy Discover this quarter, is 5% back grocery stores and Walmart.
That’s awesome. 5% back for the groceries I was already going to buy.
In that case, it makes complète sense. Where I come from (France), we don´t have that system and where I live now (Korea), the crédit card system would like me to spend a certain amount of money that I wouldn't normally spend, and on certain categories/ places that I have no interest in, in order to get perks, so I don´t see the point.
As a foreigner living in Japan, getting a CC here is ridiculously hard. Luckily, Japanese debit cards give points, which can be converted into yen. Also, there are no minimum balances required in Japanese bank accounts.
I spend less when using cash or debit cards. I understand the whole points and miles thing, and the protections with credit cards. But my life is simpler when I don’t have to worry about payment dates and possible interest.
thats exactly right - I do spend less when I just have cash too.
I still feel that if I focus on cashbacks too much, I will sometimes buy something that I actually wouldnts buy without cashback
While I respect Humphrey, I'll still avoid credit cards. The juice doesn't seem worth the squeeze.
I love my cc and I pay it off right away like you do. It helps with knowing how much I am spending and helps my credit score too. If I happen to have any balance on the day they run my credit score then it will be 2 pts lower. My debit card has an Overdraft Protection Loan so it would be possible to spend more than I have anyway. Most of all I love being debt free! I do feel that a majority of people are better off not using a credit card, when I was younger I sometimes would carry debt for a month or two. I grew up thinking it was a normal thing to do but thankfully figured out on my own that it was not beneficial.
Dave Ramsey gives advice to people with zero mental fortitude and denegerates who cannot emotionally handle access to money. Graham Stephan and Humphrey give advice to people who have head-knowledge and can apply it without influence from mental issues.
I cut up my credit card after I built a credit rating back in my twenties. It was difficult for a while to transition to a debit card, however it's the best financial decision I ever made. I'll never have a credit card again. - Unlike this guy, I own my house, and don't rent. To me this whole credit card merry go round is like watching a dog chasing it's tail. - I worked for an airline, so I'm not looking for any frequent flyer or credit card points. It's a mug's game.
Amazing video, but I think you forgot that most credit card companies charge a small fee to retailers for transactions. That's part of the reason Amex is sometimes not accepted: they have a higher fee than most.
My credit card allows me to stay at big fancy hotels and resorts I could not afford on my own. I travel a lot, and between the hotel points and “free nights” they dole out every year, I save thousands. I pay my balance off the day each transaction posts, and pay strict attention to promotions in order to maximize the points I get on ordinary purchases. And most of all, I never use my credit card unless I have the cash to pay it off that very day.
I used to charge everything on my elite CC to keep track of my spending via the monthly statements, and for the travel perks & cash back, etc. Now, I still have that CC, but I am back to using cash for everything. Your video about the Chinese using cash reminded me of my Chinese granny and the old world ways & wisdom about money.
Love it! I’d love to see a video more in depth of using different credit cards to pay expenses (while paying it off in full) instead of a debit card to maximize their perks. Thanks 🙏🏽
Thanks for your interesting video. One advantage of transacting with a credit card is that your bank account is safe and protected. Nothing comes out of your bank accounts until you make a payment to the credit card company.
I started my credit journey at 17. Paid thousands in interest due to reckless spending in my early 20s but at least I learned. I'm 31 now with a mortgage and an 820 fico. It's all about discipline!
I totally agree with you. Use credit card wisely. Don't be its slave. With well planed purchase and discipline to pay off credit card, you can manage your finance and monthly payment. I prefer to pay grocery purchase and other bills via credit card. This way I know how to plan my next month money spending while I feel safe to have some cash in my account for a current month. Plus some credit cards offer cash back which is a reward you gain back after spending like you pay $300 for grocery then you get $6 back like getting a discount. These are things that debit card will never have.
I'm over 70. I use my credit card for online purchases and pay it off well before the due date. I usually use my debit card for groceries. And I usually use cash at restaurants because it gives me the satisfaction of helping to keep the 'cash' system going which gives me the feeling of anonymity from 'big brother'.
My wife and I only use credit cards, and she has set our cards to use as to which category will give us back the most cash back rewards. We do not use any credit cards that charge an annual fee. We also pay-off any balance that we incur, regardless of the amount when it is due and sometimes before it is due. We do not make any minimum payments thus no finance charges or late fees. Therefore, we consider ourselves a credit card’s worst nightmare.
I’ve also noticed that when I’m in line to pay for a purchase that some people who use their debit cards don’t ask or wait for a receipt. I wonder how they keep their books in proper order. I also wonder how many of debit card users have either poor or no credit.
We really all should be using cash instead of ANY cards. Every transaction we're charged an extra 3% on all puchases just for using plastic. This increases prices on everything
Good vid. You didn't talk about cash though; I thought you were going to. I use cash about everywhere I shop locally. The primary reason is that it is not traceable. Yeah 'they' have ways of knowing where I went but they have no clue what I bought On the downside, to be fair, if someone robs you or steals your wallet that money is gone.
One HUGE disadvantage of debit cards is if the bad guys get into your account and steal your money there is no getting it back. Banks will not reimburse you like a credit card would do if the same thing happened.
Credit cards are much safer overall. They do have one significant flaw, which is the same with a debit card. Both are electronic payments. Which means that most cc companies can and will watch what you buy and sell that information to retailers.
I use credit cards at every opportunity to charge. I receive 2% cash back as incentive. My typical charges total $3000 a month or $36,000 annually. This provides around $700 cash back a year. It pays my cable bill in concept. I pay off total twice a month. That keeps me debt free. FYI, fico is 846. Ramsey is right but I have the disciple to live well below my means. Not all do,
I agree but if we look at the numbers. Credit card debt is astronomical in this country. So its fair to say most of the country should not use a credit card.
This is great information. I'd like to fully transition to using my CCs for all of my spending, but I've often dreaded the feeling of not having some cash on hand or available for usage. I like the idea, but there's an entire mind-shift that comes with this
I almost only use credit cards. Always pay the balance in time and never pay interests. Have been doing this for 6 years now, and it pays vacation( for my family every year(with the points I earn on my cards). This year we flew business from Europe to Mexico. Normally I would have to pay upwards of $10.000 for these tickets, but thanks to my credit card spending, it only cost me taxes and fees to the airline company. Saved approximately $9000.
So if you have the discipline, use credit cards. Use them smart and enjoy the perks they give you :)
Unless you have a debit card that offers cash back, didn't hear that covered in this video. I do agree that it's sometimes better to use credit card because of the feeling of security.
I use credit. I used to pay in full every week or so, but then I got married and inflation happened while I try to save to buy a new house, and now I pay off as much as I can at any point to not get not get interest (because interest on my cards is calculated based on if it was over 30 days or something). I only have about 3K on balance at any given moment and have far more than that in savings, it's just my way of getting myself to say "no, don't buy more now just because the card balance is zero" because that does sometimes happen.
Nope, this is a US perspective not valid in Canada. A debit (or Interact) card is better than debt for debt sake.
Keep an accurate record. Treat it like a checking account and maintain a check record. Your debit is just an alternative to writing a check so it should be record in the check register. A credit card register keeps track of what is going to billed.
I love your videos! I use a credit card and pay the balance off every month. 35 years ago I did not know how they worked and got into credit card debt. It has been over 25 years since I have ever carried a balance. I have a spreadsheet that I use to track my balances and determine the due date. I pay partial payments in lump sum every two weeks so I don't dread the official payment due date. While Dave Ramsey has good intentions on not using credit cards I think his followers actually pay more for insurance. I live in Southern California and things are so pricey here that I want rewards when I can get them. I do not own a debit card. I still have a ATM card to use when I need to take some cash out. It should be noted that more businesses are choosing plastic over cash because cash must be kept in a safe place and deposited into a bank (labor).
This only typically applies in North America and the UK. Credit cards have no rewards in most other countries of the world. Many countries also impose legal restrictions on who is entitled to receive credit.