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  • When you begin this journey, you're going to have so many people telling you that it's just not possible to live without debt, and especially without a credit card.

  • Friends are going to tell you that.

  • Family's going to tell you that.

  • Commercials are going to tell you that.

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

  • There are currently 459 million credit cards in circulation today.

  • And only 327 million people living in America!

  • That's like 132 million extra cards that are not assigned to a person, but they're floating around.

  • But they are assigned to people, because the average person carries four credit cards.

  • 68% of people who use their credit cards said they use it on things that they need.

  • But the most common type of credit card are the ones they sell you at retail stores.

  • Yes, 41% of people have store specific credit cards.

  • And last I checked, not many emergencies can happen where J.Crew swoops in and solves your problems.

  • Maybe a fashion emergency, but no other emergency.

  • Store credit cards, actually you guys, they are the worst you can get.

  • Their interest rates are nearly double of traditional credit cards.

  • So let's just assume that you accumulate $1,000 of debt on a store credit card.

  • This is actually way lower of a balance than the average American, but it's just a nice round number.

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

  • And let's say you pay two times the minimum payment every month on your balance.

  • For a store credit card with a 25% interest rate, it's going to take you 27 months and cost you $307 in interest to pay off that balance.

  • So let's say you signed up for that credit card when they said, "Would you like to save 15% on your purchase today?"

  • And you said, "yes!"

  • And let's assume that you spent that whole $1,000 we talked about earlier when you signed up for that store credit card.

  • Which is pretty unlikely, but let's just say you did.

  • That 15% saves you $150.

  • But you end up spending $307 in interest.

  • Guys, let it sink in.

  • It's just math, people.

  • And then you look at the facts and the profits from places like Macy's.

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

  • And stores like Kohl's and Macy's, they actually pay their employees for each credit card application they get.

  • It doesn't even matter if the application is approved.

  • The employees get a commission for just getting someone to sign up for a credit card.

  • And some stores even threaten to take away hours from employees who are not signing up enough people for credit cards.

  • It's a huge problem.

  • And you guys, I know a lot of people who sign up for credit cards with really good intentions.

  • They do it for the points, because they think they can pay it off every month, but it's just not the reality.

  • Only 45% of people pay off their credit card balances every month.

  • And there's $784 billion in outstanding credit card debt out there.

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

  • So the bottom line is: credit cards are not going to help you build wealth.

  • They're actually going to steal it.

  • Because again, I said it earlier, at the top of this episode, but it's true.

  • So many people say, "Well I'm going to get a credit card to build my credit, so that I can buy a house."

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

  • It is possible.

When you begin this journey, you're going to have so many people telling you that it's just not possible to live without debt, and especially without a credit card.

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The Truth About Credit Cards That No One Is Telling You

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    Lian posted on 2019/11/27
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