Hey guys, it's Dave, as you know, I'm always looking to protect our listeners from scummy companies, bad products and money. Traps designed to keep. You broke the Ramsay network launched a new podcast called the fine print. We want give you a sneak peek at our first episode, where our host George Camel covers the hidden truth behind credit card rewards. These companies are. Add for everyone! Listen to this episode of the fine print today,. Do you have credit cards? I do so. I used my the cards for everything, because you get points back, so I figure you're going to spend the money anyway and if you're gonna pay your balance than you might as well, get like the three points that come with it. So what do you use the one for just? everything in there. It has paid off monthly, so yet rewards guys happening credit cards. You have to have growth.

Well I'll, have you do? Ok? Ok, so you want to save you you have to because one of damage already beginning you gonna pay for anything that you're only high value of this, for guess we're getting money forget it. I get points. Ok, so you like the points he likes the gas, something forever I hear how much free money have you received from credit cards ive been about seven hundred dollars. Ok, yes, get like rewards from using your card idea about in one of those rewards. sir. I I just got a lot of cash back change, your life, where's ecologists, man. It's a knack for its nails, from Ramsay network. This is the fine print a show where we talk about the hidden truths that are keeping you broke, I'm George Camel and in every episode I do the research for you on the latest financial trends and traps to help save you time and money this week, talking about a shiny piece of plastic that has become a part of the fabric of american culture.

not Kim Kardashian, I'm talkin about credit cards and, more so Typically, the main reason people are using them for the rewards, statistically speaking, Eighty percent of you listening right now probably have at least one credit card in your wallet or fancy. Its loading cheers. phone or watch. unlike you heard in the opening credit card users, of them. Some rewards, in fact seventy nine per, and of credit card users say that rewards are the most attractive feature of their favourite card I remember being the same exact way when I was twenty two I got sucked in with the lure of up to five send cash back on a discover guard. What I actually discovered, What how bad? I wasn't! Managing money thousands of dollars. Later I got some cash back and, along with it, a big old pilot credit card debt. and forty eight percent of America is right there with me unable to pay off their credit card bill every month, but a

We get those rewards right well kind of a twenty two One bank rate study found that thirty one percent of people never actual. redeem the rewards, soda fig. out of all the incentives. Cash back for flights and give cards really get you ahead. When it comes to your money, I talk to a later Battelle up these days she's a researcher and writer on consumer issues and the economy, but not too long ago she was a senior business manager for the credit card division capital, one. You probably know their targets, but here's what's in their wallets twenty six billion dollars. That's how revenue they made in twenty twenty by being one of them guess lenders in the country and while Alina was working there, she saw at first hand how rewards are great for credit card companies and not always great for the consumer. So I was

working capital, one in twenty thirteen. I was right out of college, really didn't know that much about the industry. So I came in believing it was an industry. Where was really thinking that credit was just cool that people could use. I had had this mentality that people were and decide whether or not they needed to borrow money and make this informed decision on their own. But really I realise that there are so many people who get the credit card just further reward initially and then occasionally start spending more than they expected in a really gets into this cycle, where one or two bad months turns into interest that they then can afford to pay off where they can then be really struck in debt for years over one or two months where they didn't realize it spending more than they earned according to a liner over spending stumbling into cycles of debt is exactly what Companies are hoping for and they're, not just hoping for it. There are aiming for

yeah and you look a capital one chase city. What you'll see if you look at their job hosting says one thing they look for people who are good at is they'll, say we want people who have expertise and running experiments. They say that is because all these credit card companies do literally tens of thousands of experiments on their customers every year, one of them heads of experiments is sending people different combination of terms and seeing what causes you to open the mail and why and then really got down to the science to take her out, not just across the board, but even for specific people. What's gonna them to get into the most dat, and so it is not surprising that that has evolved, the direction of getting more and more complicated overtime and on the flip side of these people experiencing here Ship, you know a lot of stories I hear and people outside of my around that are our friends on Facebook, Togo, Abbot

George, I'm winning. Okay, I haven't paid for a vacation in years, I'm I'm hack and the system beaten the game. is that a reality of you heard success stories like that and are those people really winning? Yes, I think it's sort of ITALY, bag. I dont want to say that nobody winds from the system of credit card rewards. I think I would sort of say their system of winners and losers. So I will say I do think some people get a good deal from credit cards rewards. Although there are a lot of tricks and fees, I think there's one. He will think that they're getting a good deal who aren't mainly to topple about, but some tricks with rewards, but I think the biggest way that it comes about his suggestion, for it is able to spend more than they would otherwise

to get that are only spend bonus to get those rewards to go on that vacation in there. That means, even if it doesn't push them into data, doesn't mean that that's helping them with their financial goals when they could have been saving for retirement saving for their kids education, paying off their own from the ones that they have them. Whatever the case may be taught me more about those tricks because I do feel it a lot of things. People don't know about this industry about, rewards and points they just see. If I and x amount by end of the year, yet a few hundred bucks or a thousand bucks. So what are those other tricks? I think there's three tricks that everybody should have in mind when it comes to drive forward. The first is that they can take away your credit card rewards Mr payment, that's a fairly common industry practice, although it's not every credit card issuer. The second one is that credit card rewards can be devalued, so you see this less with cash, words and more common with, like any sort of hotel point airline.

point, but even things words like a generic point or mile system with their credit card that they'll it might be at first, when you open the card, might be able to get a hotel where twenty thousand points and then suddenly, without really making a lot of public announcement. They'll change it, where it's like. Oh, that same hotel, worn out, be thirty thousand points and then sort of this work. Gradual deflation much your credit card rewards are worth over time. So it's a currency, that's not the same as cash by any stretch of the imagination, because they can say that a point that was worth a penny today, maybe you'll wake up tomorrow and it will be worth one tenth of a penny and then the third trick that I think What should be aware of, is you probably have seen a lot of these blogs that advertise genome? What's the best way for me to use my chase points or which card the best sign on bonus and all of these kind of bloggers and even companies like credit. Parma are credits

to me. The way they make money is by getting advertisements payments from credit card companies that pay for favourable spots. It's really kind of glossy form of advertising its interest and I was just looking at some research that was showing Canada. a where they say: hey. You get two percent in cash and another one where they say. Hey, you get five thousand points you can redeem a fifty dollar gift card and that level of Fusion and game of vacation can count psychologically may consumers. Oh, I don't know how much I M getting more because not all you know apples, apples here Have you seen that psychology and marketing side, where they using these experiments cigar, have we call it points instead of cash back people kind of lose the connection to how much of their spending o absolutely yeah? I think it's really. The point of experiments is to figure out you. Don't you

things one is for taking the same amount of money from you. What way can they display it? That seems the cheapest, is it really the whole evolution of these credit card rewards very complicated fees and pricing structure? I mean the average credit card as about thirty different price points, so thirty different ways that the amount you pay is altered by different fees. Interest rates like cheers of rewards the whole point of that is to tinker around the edges and figure out for each person. What's the thing that they're gonna think is the best deal and then the second part of it is what set of terms cause them to use the card in the way that is the most profitable for their credit card company. My conversation with Alina with was super eye opening to just how sneaking companies can be caught. Currently running experiments in finding just a right combination to offer in order to get you to sign up for their card.

Why would they promise all these free flights in cash back and other too good to be true incentives? It can just be because they're trying to be nice right at the end of the day, These companies are trying to make money and they know that most Americans actually just use their cause. For emergencies or even pay it off every month which cause those crazy high interest rates to kick in and puts money back in their pockets You should always know that enter strategy over all was losing money, their credit card companies, but just stop at right. So the majority of people were really ripping off the hunter her companies by getting rewards they would stop offering rewards like immediately the vast majority of people who think that their gaming, the Hertford companies to do it correctly, like you, always have to make it a full time. Job which point I would say well what, if you spend all that energy on your actual full time, job is

another way to spend that energy. That would mean more for your family's financial future and I think in most cases the amount of diligence it takes to really like corn on quote, beat this system is so high that at that point, like you're, really wasting your time relative to the pennies on the dollar that you're getting. I learned the whole lot from a lot of time in the belly of the credit card beast, but the thing that really got me fact that they run ten thousand experiments on customer behaviour to better grasp how to get them into debt and keep them you're, a mouse and a giant experiment than you might think you one when you make it to the cheese and all this talk of chasing rewards and cheese and mice reminds me of nine year old, George visiting the entertainment mecca, the late twentieth century, Chuckie Cheese, where a kid can be a kid what I remember most about this place. It's not

smell of the dirty socks and ball pit sight of that creepy animatronic banned or the taste of that pizza. That was equal parts card board in Spaghetti Yos, it was the sounds my parents would give me. Ten bucks I put it into the magic machine, watch him. Listen as it turn that boring old bill into shining gold, tokens of joy at school them up, and I begin asked eight minutes of my life until they ran out from whacking eight or to cyclone to ski ball. I was more terribly transported to a german festive paradise. These games would see, those tokens in and after approximately forty two seconds of fun, would spit out a measly five. Take it if I was lucky I take my winnings and had to the pies counter to claim my reward. I look up at the all high hopes that I had enough tickets to get the really good prizes. Then I'd feel my foot Little heart sank when I really I could only afforded dinky prizes in the glass case below to pieces. our candy and one of those stretches

dickie hands. So in the end, I had blown ten dollars and eight minutes to give them overpriced junk, but I would never ban eyelash ad in the store Nine year old me was under the illusion that I was winning the game, but in the end, I was the one who got played Jacob Civic can relate not to my experiences at Jackie Cheese. I didn't think to ask him about that, but to the Chuckie Chase of credit card rewards see what I did there for Jacob. It was all about those free airline miles and, unfortunately, for him, those reward. Never quite took flight. Instead, he found himself falling deeper into debt, breaking up interest in fees they would take him. Gibbs fell back into one fourteen was really kind of reestablish credit, inoffensive, tacking Jerry,

name brand credit card and all I can get southwest points, so I can have flights in the sense of how we can take a trip. It's not going to cost us anything and did that pan out for you well at the time. Yes, it seem that way. because when you sign up and need, but those first purchases on there and you hit the foot benchmark they had. She was like fifty thousand points How we get candies sign up bonuses. I gave you make all these programmes the first month will give these fifty thousand poor way in just two points or dollars so made it easy. But that was the last time it was easy. Then he just got it. Well, lot of people, they open these cards and they got well. I'm never going to never going to pay interest. I'm going to pay this thing off every month without fail. Did you become one of those people? Yes, I did and I have the proof

fourteen alone I paid for one or two dollars and interest in peace and I opened that year What were the rewards? What did you actually end up getting good all the mass and try to kind of figure out? Looking back at the place, we took and looks like we took about flights round trip So why did those flights cost you? As far as your credit card spending, do you know yeah it's about We also need dollars per person for the average round trip. Like we look for the cheapest flight. You know we could find took the least amount appoints a weaken maximize the number of flights that we thought, one gonna cost of anything, so that came up too little over twenty. Two hundred dollars so there's two ways I looked at it. I said I will as the track that offer. total that I spent just an interest in these and that's about thirty six hundred dollars or four hundred.

nine dollars average in interest earth like oh. So if you bought these flights outright, you just went southwest up. you don't have a credit card you would have spent twenty two hundred dollars is what you're telling me what, but instead you spent fifty eight hundred dollars in interest in trees yikes. Not to mention that hundred in some dollar among payment going out the door every single month on their credit card, and I could take it a step further. We just paid off two months ago. The credit card we used to pay for our honeymoon nine years ago my gosh reliving the memories re every month for nine years, subconsciously. I knew I was getting screwed on the deal but it wasn t until last weekend. I was watching them I didn't mean getting all the numbers that I said

my gosh, this is what we actually spent for our current group free flights with the airlines. I don't want to think about how many times repaid for our honeymoon. What do you think he'd be financially if it wasn't for that chase card will be closer to being that or out of date, and my wife If he is at work. Well would be home with our child, which was that it was to be seen a mom. So it's holding you guys back from living life. You want one you have options and she can decide. I can stay home because we don't have any payments. politicians are gonna, be saying: oh mom, at least while their home, sadly, Jacob story is not super unique, with almost half of them

tumors not paying off the card every month in the average interest rate sitting at over sixteen percent, just one Miss payments can set you back wave. Faster than a two percent reward can ever pushing forward. Now you might be thinking to yourself George. I pay my card off every month without fail, I'm not a dummy, while two that I say: let's do them Let's say you make forty five thousand dollars and you put everything you possibly can on your credit card this year, laughter taxes in your rent or mortgage comes out. You could probably spent five grand on their card. If you are just swiping and put enough. Away and savings all your long with an average of two percent cash back. You get five hundred dollars back at the end of the year. Five hundred bucks might sound like a lot of money but you're not taking into account a whole bunch of stuff for starters, hard probably has an annual fee,

high interest rate- if you don't pay it often for next up, you probably wouldn't have spent twenty five thousand dollars. If you're spending your own hard earned money using cash or a debit card. If you need some science to back this up, Multiple studies show that people do in fact been way more when they use a credit card and when they use cash, a study from Federal Reserve Bank Boston show that the average you have cash transactions was twenty two dollars compared with a hundred and twelve dollars for non cash transactions, a k, a credit cards. That's a four hundred and nine percent spending increase by swiping for some cash back fees, interest rates, and overspending aside. Still doing the math on what those rewards cost in reality, Jacob realized he could have bought those flights with cash or a debit card for way cheaper than it cost him through credit card spending and redeeming the miles, and if the math won't convince you, my friend

Anthony O Neill, just my he's the best selling author in one annual expert, and he knows the credit card rat race all too well. Here's a recent clip from his show the table with Anthony Yoni. Why do you need a quick for? We were points? Why not give free, but what is it really a reward to get into debt half ago right now, I'm gettin is point some kittens free heirloom out. Are you really getting it for free? You just wrecking update your playing with fire

trust me. I did it for years. I got the critic car for emergencies. You know what turn into an emergency to impress her to take her out the red lobster debar some flowers to take her on a trip down a road that turned into a freak in emergency. That turn me into debt, and then that led me to say, but it back to my car, because a meat trying to impress people, but they know what happened when I went to impress people they were rocking with me. But then, when I was on the bottom, when our Cypriot back the Marquis when I was myself at a boys, girls cup at a whimsy. No one offer me a place to come. Take a shower. No one offered me a place to come to some to eat. No one offered me a place. You can lay my aid, but when I had the money, when I had the credit card, when I was wrapped up in debt, is spinning it all on the Ladys all my friends they loved me. Then. but then, when I really needed them, no one was there for me not ass. Much

That may not be your story when my family members has eight credit cosmic, what the heck a credit cards but Tom Allergic, this family member, this family members always asking for money always asking for help, but why are you asking for help because you're living page at the patriot, your racking up, get in your living way beyond your means for went so you can look good. It is not worth it That robs you of your future, get destroy your dreams that will prevent you from accomplishing your visions and your goals when it comes to building true wealth. Stop common at me all credit car points is good to get their free one point not or is good with a stable

credit score. No man, a lot of you in America right now carry credit card and I got the black card, my backpack it with what the heck possessed me. I mean apps. a loop lean. Nothing I want to brag about having debt in my backpack is such that the big quiet I Americans, with credit card they carry on average on average, a balance of six thousand eight hundred and seventy dollars the american household in average balance of fourteen thousand dollars. What now washed is only forty percent less than half of credit card users pay their bill. all every single mom are you. Why seventy eight percent of us are living page it, the paycheck and struggling because less than half of us I just have a credit card for emergencies, hypocritical, because

we get my erle mouths, but you will pay off companies passion there is rooted in experience. He said, first hand, and he seen what it's doing to an entire generation of millennials who were taught the stuff in school or at home. We ve got to think bigger Points and rewards we ve got to think about our future about our spending have and about a long term plan for our money. As you heard from him the story, Jacob story, my story and the lanes insights. It's easy to get sucked into the land of rewards, and I get it Those like you're, being smart with your money, but in reality, are stepping over dollars to pick up pennies and that's always a bad move. Stop playing the game, cut up the card and pay for things debit or cash once you start being more intentional, with every dollar creating and sticking to a budget and using your own money, I guarantee you will feel way more progress by the end of the year.

out of the credit card rat race running your own race, one that doesn't with a pile of debt and regret, and only Reggie sticky hand consolation prize to show for it. If you're wondering how to actually pay off your credit card that live without a credit card and reward yourself instead check out Ramsay, plus It's an online membership that gives you all the resources, videos and tools you need to get out of debt and reach your money goes faster. You can sign up for free dna trial, and check out lesson five and financial peace University. It's called buyer! Beware, and in that lesson we break down the slick marketing that companies used to get you into financial trouble to start your free trial text, the word fine print to all one word to the number three thousand three hundred and seventy eight. That's fine print, followed by the numerous too to the number three three, seven, eight nine. Or just click the link in the shown us been listening to the fine friend if ve enjoyed it subscribe.

And Review s word, every listen to podcast and share it with friends are show it. used by Chris Right, Mass and broader Erika Lavish an Christie ourselves producer as Amanda Rogers. This episode was engineered annexed by will rudder with writing help from either Daniel our executive producer is black Thomson, I'm George Camel can remember, no amount of credit card rewards can make you rich and no amount of hands in a tighter consists, in fact, you from the checking cheese, vomit