The Rachel Cruze Show - The Billion-Dollar Scheme You Didn't Know You Were a Part Of

Starting point is 00:00:05 Anytime something becomes normalized, people start questioning it less and less. And one thing in the financial world that is so normal is credit cards. But there are some crucial things that you need to know about how this industry works. So make sure to subscribe, like, and share this episode with a friend. So first and foremost, credit cards are not a helpful spending tool for consumers. They're a multi-billion dollar industry. Yes, credit cards are a form of debt. You borrow money, you pay it back later.

Starting point is 00:00:33 And if you don't pay the full thing, you're paying interest on top of that. And so it's just really a way for people to either play a game, trying to get points in airline miles and all this stuff over here, or they're like literally using it because they have to make ends meet and they end up living beyond their means. And the credit card industry is there to catch their slack versus their own money. So it's really this detrimental part of the financial industry that everyone is like, oh, it's great.

Starting point is 00:01:02 It's fine. But I'm telling you, living an autonomous life, like where you have a say over every part of your life and you're not borrowing money from the bank, not only do you spend less, but there is so much peace in your life when it's just you dealing with your money. So, listen, we have established that, yes, credit card companies, they exist to make money, and they're very, very good at it. So let's talk about how they do this. So like I said, the first way is interest payments.

Starting point is 00:01:27 I mentioned that earlier. But if you pay your bill off every month, you may not be feeling this pain. but what we're seeing more and more is people are not paying their credit cards off every month and they are accumulating more and more debt. And so what happens is you end up paying interest, like basically a fee on top of what you already owe. And that interest with credit cards can be as high as 18, 22, sometimes 25 percent. We're saying like it's insane the amount of interest that credit card companies are charging. And so there's actually some legislation going on to lower that, which would be great, just to protect some consumers.

Starting point is 00:02:01 but man, it is a real thing and they make so much money off of interest payments. Now, another way that credit card companies make money is through annual fees. So the biggest pushback that I get about credit cards is, yeah, but Rachel, you know, the points in the airline miles, like I get all these perks. And so, yeah, these perks may feel like free in the moment,

Starting point is 00:02:19 but the truth is you're just paying for those perks at a different time because of what you're paying over what you would if you weren't using a credit card and plus all the annual fees. So they can run anywhere from $50 to $560. $600. So again, yeah, it feels like some great perks to sit at a great lounge at the airport, but you're spending that much money a year to do that. Now, if you don't remove your personal data from the internet, it's basically like a billboard for your information because your name, your address, your email, and even your kids' names are out there on sketchy data broker websites.

Starting point is 00:02:52 So data brokers, they collect your data, they sell it, and they put you at risk for scams and fraud. Delete me, remove your data to help protect you from fishing, harassment, and other online threats. Winston and I, we use Delete Me and it saves us so much time and so much worries. You guys, your family safety is huge and financial security is way too important to leave it exposed. So sign up for it, delete me and take control. Go to join delete me.com slash Rachel for 20% off, bringing your monthly costs to under $9 a month. It's incredible. So make sure click the link in the description to check it out. All right, the third way credit card companies make money is swipe fees.

Starting point is 00:03:34 So every time you use a credit card, whoever you're buying from has to pay a processing fees. So businesses increase their prices then to cover that cost. And if you've ever gotten a discount on a big purchase because you're paying with cash, swipe fees are what sellers are trying to avoid. So as they're swiping through, they are paying money that retailer is. is. So credit card companies make money when you swipe your credit card. The fourth way that they make money is late fees. So if you are late, they will charge you some more fees. And credit card companies

Starting point is 00:04:09 have the right to charge late fees anytime, even if your first late payment, you know, it was barely past the deadline. Like there's no room for human error on this. They will charge you. And sometimes if you have like some deal with debt where it's like no interest, all this. And the fine print, it's like if you're late, you get back charged all of that too. So They find ways to make a lot of money. Now, the fifth way credit card companies make money is with other corporations. When you think about airlines and credit card companies, they're not just like best friends.

Starting point is 00:04:38 They just want to hang out together. No, they're doing it because they have that relationship because they are making so much money off of consumers. Yes, they are business partners. And airlines actually sell miles to credit card companies. And the credit card companies pay for them with your money from all the fees we just talked about. and they're in cahoots together. So again, this is all of your money, you guys,

Starting point is 00:05:00 that's just kind of going to this industry of debts. And again, if you look at bank buildings, even in your city, they're huge and they're nice and they're wonderful because they make billions of dollars. So just avoiding that whole industry in general, not only financially, it's going to give you peace of mind, but man, it's going to give you your paycheck back to then actually use that money to make money for you.

Starting point is 00:05:24 Like use money to save and invest over. here to make you money not to make the credit card and the bank's money. So when it comes to getting out of debt, it is so, so key that you really focus on becoming debt-free because your income is freed up. But the truth is that this video just scratches the surface when it comes to how the industry preys on desperate consumers. So if you want to learn more about this, make sure to check out this episode on the true price of living with debt right here. Or if you're listening on podcast, click the link below. Or you guys, remember to take control of your money and create a life you love.

The Rachel Cruze Show - The Billion-Dollar Scheme You Didn't Know You Were a Part Of

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