1 00:00:04,480 --> 00:00:06,920 Speaker 1: Credit cards have always been a bit baffling to me, 2 00:00:06,960 --> 00:00:10,520 Speaker 1: if I'm being honest, and I think that's because credit 3 00:00:10,560 --> 00:00:12,959 Speaker 1: cards have kind of been vilified in films and TV 4 00:00:13,240 --> 00:00:16,599 Speaker 1: as this slippery slope of spending that makes us believe 5 00:00:17,000 --> 00:00:19,560 Speaker 1: we can buy anything we want until we can't and 6 00:00:19,600 --> 00:00:22,400 Speaker 1: we're in even deeper financial trouble than before we had 7 00:00:22,440 --> 00:00:25,800 Speaker 1: the credit card. Take the movie Confessions of a Shopaholic 8 00:00:25,840 --> 00:00:29,240 Speaker 1: as a prime example. The opening scene talks about these 9 00:00:29,320 --> 00:00:32,320 Speaker 1: beautiful women who have beautiful things and they don't even 10 00:00:32,320 --> 00:00:38,639 Speaker 1: need money because they use quote magic cards credit cards. Eventually, 11 00:00:38,640 --> 00:00:41,720 Speaker 1: in the film, this obsession with credit cards leads our 12 00:00:41,760 --> 00:00:45,839 Speaker 1: heroin into sixteen thousand dollars worth of debt. When a 13 00:00:45,920 --> 00:00:48,640 Speaker 1: story wants to show us that someone is in for 14 00:00:48,720 --> 00:00:52,320 Speaker 1: difficult times ahead, there's this classic scene where their credit 15 00:00:52,400 --> 00:00:55,400 Speaker 1: card is declined, and that's our first signal that a 16 00:00:55,520 --> 00:00:59,520 Speaker 1: character is about to hit financial rock bottom. We're constantly 17 00:00:59,600 --> 00:01:02,440 Speaker 1: present with these storylines that portray credit cards as these 18 00:01:02,480 --> 00:01:06,280 Speaker 1: proverbial financial poison apples. But according to a report from 19 00:01:06,280 --> 00:01:09,160 Speaker 1: the Federal Reserve System on the Economic well Being of 20 00:01:09,200 --> 00:01:12,240 Speaker 1: the US household in twenty twenty one, eighty four percent 21 00:01:12,280 --> 00:01:15,320 Speaker 1: of US adults have and use credit cards, so it 22 00:01:15,360 --> 00:01:18,440 Speaker 1: begs the question are credit cards all bad if so 23 00:01:18,520 --> 00:01:21,959 Speaker 1: many people have them? I know we have to be 24 00:01:22,000 --> 00:01:25,360 Speaker 1: careful about accruing debt, but can credit cards also help 25 00:01:25,440 --> 00:01:28,880 Speaker 1: us achieve good financial standing? Also, if someone could tell 26 00:01:28,880 --> 00:01:31,399 Speaker 1: me how to get the most out of the rewards 27 00:01:31,400 --> 00:01:34,840 Speaker 1: i'm the card, that would be great. Let's figure it 28 00:01:34,880 --> 00:01:37,920 Speaker 1: all out together and start taking notes because this is. 29 00:01:39,520 --> 00:01:39,920 Speaker 2: Stuff. 30 00:01:43,760 --> 00:01:47,080 Speaker 1: Welcome to another episode of grown up stuff How to 31 00:01:47,160 --> 00:01:50,919 Speaker 1: adult Now, Matt. When we first brought up covering credit 32 00:01:50,960 --> 00:01:55,720 Speaker 1: cards and credit you were very enthusiastic about this, and 33 00:01:55,840 --> 00:01:58,640 Speaker 1: it was surprising as it's not usually something that gets 34 00:01:58,760 --> 00:02:01,640 Speaker 1: my blood pumping, and I want to know where does 35 00:02:01,680 --> 00:02:03,160 Speaker 1: this zeal come from? 36 00:02:03,360 --> 00:02:05,520 Speaker 2: So credit cards have best been described to me as 37 00:02:05,800 --> 00:02:09,720 Speaker 2: a tool, and in knowledgeable hands, a tool can be 38 00:02:09,800 --> 00:02:12,280 Speaker 2: an amazing thing. Let's think about like a chainsaw. Right, 39 00:02:12,480 --> 00:02:15,760 Speaker 2: you can cut down trees, you can trim your hedges, 40 00:02:16,240 --> 00:02:20,520 Speaker 2: but in less knowledgeable hands you could lose a few toes. 41 00:02:20,600 --> 00:02:23,600 Speaker 2: You know, like credit cards have the power a really 42 00:02:24,080 --> 00:02:27,200 Speaker 2: wreck havoc on someone's financial life. If you've got a 43 00:02:27,240 --> 00:02:30,079 Speaker 2: twenty percent interest rate on your credit card, which you know, 44 00:02:30,120 --> 00:02:32,800 Speaker 2: they can be that high. And you spend one hundred 45 00:02:32,840 --> 00:02:35,000 Speaker 2: dollars in a month and you don't necessarily pay it off, 46 00:02:35,280 --> 00:02:37,640 Speaker 2: you now not only owe one hundred dollars, but you 47 00:02:37,639 --> 00:02:40,720 Speaker 2: owe one hundred and twenty dollars. And if you keep 48 00:02:40,720 --> 00:02:43,480 Speaker 2: not paying it off, that compounds and it can just 49 00:02:43,639 --> 00:02:46,720 Speaker 2: spiral out of control really really quickly. I was very 50 00:02:46,760 --> 00:02:48,280 Speaker 2: lucky when I was a kid. My dad was like, 51 00:02:48,680 --> 00:02:51,160 Speaker 2: if you get a credit card, you pay it off 52 00:02:51,600 --> 00:02:54,440 Speaker 2: every month. There were years where I didn't have one 53 00:02:54,440 --> 00:02:55,959 Speaker 2: because I was like, I don't feel like I can, 54 00:02:56,120 --> 00:02:58,440 Speaker 2: you know, do that right now. But to get away 55 00:02:58,440 --> 00:03:00,320 Speaker 2: from all the scary things, they can also would be 56 00:03:00,360 --> 00:03:03,480 Speaker 2: something really positive, Like they are the easiest way to 57 00:03:03,600 --> 00:03:06,040 Speaker 2: establish a credit history, and we'll get into that in 58 00:03:06,080 --> 00:03:09,000 Speaker 2: the episode, but essentially having a positive credit history makes 59 00:03:09,000 --> 00:03:11,240 Speaker 2: it a heck of a lot easier and more affordable 60 00:03:11,280 --> 00:03:13,760 Speaker 2: to buy a car or a home. Also, if you 61 00:03:13,800 --> 00:03:15,760 Speaker 2: spend a lot of money on dining out or at 62 00:03:15,760 --> 00:03:18,280 Speaker 2: the grocery store or traveling, there are certain credit cards 63 00:03:18,280 --> 00:03:20,160 Speaker 2: that you can use that will give you cash back, 64 00:03:20,240 --> 00:03:22,560 Speaker 2: like actual cash back, like they'll just credit it to 65 00:03:22,600 --> 00:03:24,880 Speaker 2: your credit card or travel points, so you can put 66 00:03:24,880 --> 00:03:27,880 Speaker 2: towards future travel purchases, and more than anything, I think 67 00:03:27,919 --> 00:03:31,000 Speaker 2: credit cards can be a bit mysterious, and I'm excited 68 00:03:31,040 --> 00:03:33,919 Speaker 2: about equipping our listeners with the knowledge they need before 69 00:03:33,919 --> 00:03:36,600 Speaker 2: diving into their own credit card journey. Yeah. 70 00:03:36,640 --> 00:03:38,480 Speaker 1: Absolutely, I was really nervous to see where you were 71 00:03:38,480 --> 00:03:40,960 Speaker 1: going with that chainsaw analogy, but you made it work. 72 00:03:41,000 --> 00:03:42,040 Speaker 2: I figured I followed you. 73 00:03:42,080 --> 00:03:45,840 Speaker 1: I totally follow But when it comes to credit cards, 74 00:03:45,880 --> 00:03:48,440 Speaker 1: there are few sites more apt to help us understand 75 00:03:48,840 --> 00:03:52,600 Speaker 1: than nerd Wallets. So we have invited Sarah Rather from 76 00:03:52,640 --> 00:03:55,000 Speaker 1: the nerd Wallet team to help us figure out the 77 00:03:55,040 --> 00:03:56,000 Speaker 1: basics of credit. 78 00:03:56,160 --> 00:03:59,840 Speaker 2: That's right. Sarah has appeared on The Today Show, CNBC's 79 00:04:00,080 --> 00:04:03,080 Speaker 2: Nightly Business Report, and quote it in The New York Times, 80 00:04:03,080 --> 00:04:05,960 Speaker 2: The Washington Post, The Wall Street Journal, Business Insider, and 81 00:04:06,040 --> 00:04:08,840 Speaker 2: Reuter's just to name a few of the places that 82 00:04:08,880 --> 00:04:14,040 Speaker 2: seek out her advice in insights on personal finance. Hey, Sarah, 83 00:04:14,160 --> 00:04:17,640 Speaker 2: welcome to the show. Before we get too far into 84 00:04:17,800 --> 00:04:20,000 Speaker 2: credit cards, I'd actually like to take a step back 85 00:04:20,400 --> 00:04:25,840 Speaker 2: and talk about credit. You know, like, what is it? 86 00:04:25,839 --> 00:04:28,719 Speaker 3: It's essentially the ability to borrow money, That's really it. 87 00:04:28,960 --> 00:04:31,600 Speaker 3: Whenever you talk about a line of credit or a 88 00:04:31,760 --> 00:04:34,799 Speaker 3: credit card, or anything with credit. You know, buying something 89 00:04:34,839 --> 00:04:37,919 Speaker 3: on credit, it's just borrowing money, and then you have 90 00:04:37,960 --> 00:04:40,080 Speaker 3: to pay it back. And if you don't pay it back, 91 00:04:40,200 --> 00:04:43,680 Speaker 3: that's where things get a little expensive or a lot expensive, honestly. 92 00:04:44,360 --> 00:04:47,600 Speaker 3: So at its core, you're just talking about borrowing. 93 00:04:48,360 --> 00:04:52,440 Speaker 2: So then for people who don't necessarily need to borrow money, 94 00:04:52,760 --> 00:04:55,479 Speaker 2: you know, they have a debit card that is associated 95 00:04:55,520 --> 00:04:58,839 Speaker 2: with their checking account, why might they want to consider 96 00:04:59,000 --> 00:05:00,000 Speaker 2: getting a credit card? 97 00:05:00,880 --> 00:05:06,520 Speaker 3: A credit card is a pretty quick way to establish 98 00:05:07,320 --> 00:05:10,240 Speaker 3: your credit history. There are these companies that are called 99 00:05:10,279 --> 00:05:15,159 Speaker 3: credit bureaus. You might have heard of Equifax, Experience, TransUnion. 100 00:05:15,880 --> 00:05:20,440 Speaker 3: These are companies that gather data on your payment activity 101 00:05:20,520 --> 00:05:23,839 Speaker 3: or some of your payment activity, and that information is 102 00:05:23,960 --> 00:05:26,640 Speaker 3: used to calculate a credit score, which is a three 103 00:05:26,720 --> 00:05:30,839 Speaker 3: digit number. It's between three hundred and eight point fifty 104 00:05:31,120 --> 00:05:37,720 Speaker 3: and lenders, banks, credit unions use your credit history from 105 00:05:37,800 --> 00:05:41,200 Speaker 3: these bureaus and your credit score and other financial information 106 00:05:41,360 --> 00:05:46,280 Speaker 3: like your income, debts, things like that to determine whether 107 00:05:46,360 --> 00:05:48,320 Speaker 3: or not they want to lend money to you in 108 00:05:48,360 --> 00:05:51,000 Speaker 3: the form of a credit card or a mortgage or 109 00:05:51,040 --> 00:05:54,440 Speaker 3: a car loan or anything else. Because they use that 110 00:05:54,520 --> 00:05:58,080 Speaker 3: number and that information to determine how risky it would 111 00:05:58,120 --> 00:06:02,480 Speaker 3: be for them to that you borrow money based on 112 00:06:02,520 --> 00:06:04,279 Speaker 3: how likely they think you are to be able to 113 00:06:04,279 --> 00:06:08,800 Speaker 3: pay back. So the higher your credit score and the 114 00:06:08,839 --> 00:06:12,320 Speaker 3: more established your credit history, the less risky you seem. 115 00:06:12,640 --> 00:06:15,039 Speaker 3: Because you've already shown a history of paying your bills 116 00:06:15,080 --> 00:06:17,960 Speaker 3: on time, of paying off your debts, things like that. 117 00:06:18,000 --> 00:06:22,120 Speaker 3: You've already shown that you're responsible, and so they're like, Okay, 118 00:06:22,320 --> 00:06:24,679 Speaker 3: we're going to use your past behavior as an indication 119 00:06:24,880 --> 00:06:28,120 Speaker 3: that going forward, you're going to continue this behavior, and 120 00:06:28,160 --> 00:06:29,840 Speaker 3: so we will lend this money to you. We'll give 121 00:06:29,839 --> 00:06:32,080 Speaker 3: you a lower interest rate. You're less risky to us 122 00:06:32,680 --> 00:06:35,120 Speaker 3: versus somebody who maybe is newer to building credit, not 123 00:06:35,160 --> 00:06:37,480 Speaker 3: as much of a history, lower credit score, a little 124 00:06:37,520 --> 00:06:39,400 Speaker 3: bit more of a risk to the lender. They might 125 00:06:39,440 --> 00:06:41,440 Speaker 3: still lend you money, but they'll charge you more for it. 126 00:06:41,760 --> 00:06:44,159 Speaker 3: And if you are, let's say you're pretty new to 127 00:06:44,640 --> 00:06:47,800 Speaker 3: the whole adulting thing, you are less likely to own 128 00:06:47,839 --> 00:06:50,600 Speaker 3: a home owned car. You don't own much yet when 129 00:06:50,600 --> 00:06:53,720 Speaker 3: you're like twenty three years old, So that's a good 130 00:06:53,760 --> 00:06:57,080 Speaker 3: time in your life to establish this credit history because 131 00:06:57,160 --> 00:06:59,039 Speaker 3: later on, when you do want to do those things 132 00:06:59,040 --> 00:07:00,960 Speaker 3: when you need to buy your new car, when you 133 00:07:01,000 --> 00:07:03,680 Speaker 3: want to buy your first home, when you want to 134 00:07:03,680 --> 00:07:09,479 Speaker 3: borrow money to start a business, you've already established that foundation. 135 00:07:10,240 --> 00:07:12,400 Speaker 3: It takes down a lot of barriers because you know 136 00:07:12,560 --> 00:07:14,000 Speaker 3: you can at least get the money. You can get 137 00:07:14,000 --> 00:07:16,040 Speaker 3: the money, so yeah, so that's why it's important to 138 00:07:16,040 --> 00:07:18,760 Speaker 3: do that. And then when you use the credit card 139 00:07:18,800 --> 00:07:21,800 Speaker 3: responsibly and you know you pay your bills on time 140 00:07:21,840 --> 00:07:24,040 Speaker 3: every month, you don't charge too much, you don't max 141 00:07:24,080 --> 00:07:26,800 Speaker 3: out the card, within a couple of months, you begin 142 00:07:26,880 --> 00:07:31,760 Speaker 3: to see your credit score start to reflect your responsible behavior. 143 00:07:32,000 --> 00:07:34,880 Speaker 3: So it's a pretty quick process and there's a much 144 00:07:34,920 --> 00:07:37,920 Speaker 3: lower left compared to other forms of borrowing. So for 145 00:07:38,000 --> 00:07:41,760 Speaker 3: many people, credit cards and also student loans are the 146 00:07:42,080 --> 00:07:46,040 Speaker 3: first ways they begin to dip their toes in establishing 147 00:07:46,040 --> 00:07:49,400 Speaker 3: the credit history. 148 00:07:52,320 --> 00:07:54,640 Speaker 1: Credit cards are one of the first and easiest ways 149 00:07:54,640 --> 00:07:56,720 Speaker 1: for us to start building up credit and improving our 150 00:07:56,720 --> 00:08:00,000 Speaker 1: credit score. However, credit cards are super easy to get. 151 00:08:00,920 --> 00:08:05,000 Speaker 1: I mean literally, you just need your name, social Security number, 152 00:08:05,120 --> 00:08:08,440 Speaker 1: and income and you can get approved and get your 153 00:08:08,480 --> 00:08:12,560 Speaker 1: card in the mail roughly ten days later. And because 154 00:08:12,600 --> 00:08:14,800 Speaker 1: it's so easy to get a card, we have to 155 00:08:14,840 --> 00:08:16,640 Speaker 1: be careful that if we don't have the funds to 156 00:08:16,680 --> 00:08:19,640 Speaker 1: pay off what we spend, we could be negatively impacting 157 00:08:19,680 --> 00:08:22,920 Speaker 1: our credit score. But the important thing to know is 158 00:08:22,960 --> 00:08:25,880 Speaker 1: that credit cards can also offer us and our money 159 00:08:25,920 --> 00:08:30,720 Speaker 1: an extra layer of security. 160 00:08:31,400 --> 00:08:34,400 Speaker 2: Besides building credit, are there any other benefits to using 161 00:08:34,440 --> 00:08:35,160 Speaker 2: a credit card? 162 00:08:35,640 --> 00:08:42,600 Speaker 3: Yes, so credit cards have stronger consumer protections than debit cards. 163 00:08:42,600 --> 00:08:48,240 Speaker 3: Do what the heck does that mean? Right? So, here's 164 00:08:48,240 --> 00:08:51,280 Speaker 3: a common problem having your credit card or debit card 165 00:08:51,320 --> 00:08:55,200 Speaker 3: information compromised because you use your card to buy something 166 00:08:55,240 --> 00:08:58,440 Speaker 3: online and the merchant got their data compromised, or you 167 00:08:58,600 --> 00:09:01,000 Speaker 3: lost your wile and somebody stole it. You left your 168 00:09:01,000 --> 00:09:02,800 Speaker 3: card in an ATM and forgot to go get it, 169 00:09:02,800 --> 00:09:05,600 Speaker 3: somebody took it. They are just like bots that, like, 170 00:09:05,960 --> 00:09:08,319 Speaker 3: I don't know, run random credit card numbers and just 171 00:09:08,400 --> 00:09:11,920 Speaker 3: try them out. So fraudulent charges happen on credit and 172 00:09:11,960 --> 00:09:15,840 Speaker 3: debit cards all the time, and when it happens on 173 00:09:16,320 --> 00:09:19,640 Speaker 3: a debit card, basically the law is the longer it 174 00:09:19,640 --> 00:09:22,600 Speaker 3: takes for you to report fraudulent charge, the more liable 175 00:09:22,720 --> 00:09:25,680 Speaker 3: you are to cover more and more of that cost 176 00:09:26,000 --> 00:09:29,199 Speaker 3: out of your own pocket. And because your debit card 177 00:09:29,280 --> 00:09:32,559 Speaker 3: is directly tied to your checking account. If somebody withdraws 178 00:09:32,600 --> 00:09:34,880 Speaker 3: money with your debit card, that money is gone from 179 00:09:34,880 --> 00:09:38,240 Speaker 3: your bank account until the bank completes its investigation, which 180 00:09:38,280 --> 00:09:40,400 Speaker 3: usually takes a couple of weeks, and then refunds the 181 00:09:40,400 --> 00:09:43,559 Speaker 3: money to your account. So in the meantime, you are 182 00:09:43,600 --> 00:09:46,240 Speaker 3: without that money in your account, and you still have 183 00:09:46,280 --> 00:09:48,640 Speaker 3: other bills to pay, and so that can make it 184 00:09:48,679 --> 00:09:51,080 Speaker 3: really hard for you to afford those other bills while 185 00:09:51,080 --> 00:09:54,199 Speaker 3: you're waiting for that refund. It's a little bit different 186 00:09:54,200 --> 00:09:55,960 Speaker 3: with a credit cards, a little bit safer as far 187 00:09:56,040 --> 00:09:59,080 Speaker 3: as the consumer is concerned. And here's why. By law, 188 00:09:59,360 --> 00:10:01,440 Speaker 3: with a credit card, you're not liable for more than 189 00:10:01,480 --> 00:10:04,680 Speaker 3: fifty dollars worth of fraudulent charges, and most credit card 190 00:10:04,679 --> 00:10:07,480 Speaker 3: companies waive that fifty dollars entirely, so you have zero 191 00:10:07,640 --> 00:10:11,400 Speaker 3: liability and it's not a matter of the longer it 192 00:10:11,440 --> 00:10:13,080 Speaker 3: takes for you to report it, the more you're liable, 193 00:10:13,200 --> 00:10:14,800 Speaker 3: even if it takes you three or four weeks to 194 00:10:14,840 --> 00:10:16,560 Speaker 3: notice the charge because you haven't looked at your statement 195 00:10:16,600 --> 00:10:19,480 Speaker 3: in a while. Once you complain, you're not liable and 196 00:10:19,520 --> 00:10:22,679 Speaker 3: they will refund the money to you as a statement credit, 197 00:10:22,679 --> 00:10:25,199 Speaker 3: which means, because of the way credit cards work, you 198 00:10:25,240 --> 00:10:27,000 Speaker 3: essentially run up a tab for the month, and then 199 00:10:27,040 --> 00:10:29,120 Speaker 3: you pay the money out of your checking account to 200 00:10:29,200 --> 00:10:31,880 Speaker 3: pay the tab. You haven't actually lost any money out 201 00:10:31,920 --> 00:10:35,160 Speaker 3: of your checking account. You've only lost money on your tab, 202 00:10:36,160 --> 00:10:38,040 Speaker 3: and then your tab gets a credit back to it, 203 00:10:38,080 --> 00:10:40,600 Speaker 3: so you get that charge taken off essentially, so the 204 00:10:40,600 --> 00:10:43,199 Speaker 3: money is still right there in your checking account, available 205 00:10:43,200 --> 00:10:45,760 Speaker 3: to you to pay your other bills while you work 206 00:10:45,800 --> 00:10:48,800 Speaker 3: to resolve this issue with your credit card company. So 207 00:10:49,679 --> 00:10:51,719 Speaker 3: your money is a little bit more secure in this 208 00:10:51,760 --> 00:10:54,680 Speaker 3: particular instance when it comes to credit cards. 209 00:10:55,160 --> 00:10:58,120 Speaker 2: Yeah, and I actually I learned this thankfully the easy way, 210 00:10:58,200 --> 00:11:00,720 Speaker 2: because I think right after I got my credit card, 211 00:11:00,800 --> 00:11:02,960 Speaker 2: I left it at the counter of a restaurant and 212 00:11:03,000 --> 00:11:05,680 Speaker 2: someone had taken it spent two hundred dollars at three 213 00:11:05,679 --> 00:11:08,040 Speaker 2: different department stores, oh my gosh, And then I think 214 00:11:08,040 --> 00:11:09,760 Speaker 2: that they went back home and bought like an eight 215 00:11:09,800 --> 00:11:11,960 Speaker 2: dollars sandwich from the deli, because that was like the 216 00:11:12,040 --> 00:11:13,960 Speaker 2: last charge that they did, And I was like, I 217 00:11:14,000 --> 00:11:15,480 Speaker 2: like to think that they celebrated with the little eight 218 00:11:15,480 --> 00:11:17,920 Speaker 2: dollar sandwich. But luckily none of that came out of 219 00:11:17,960 --> 00:11:19,120 Speaker 2: my bank account. 220 00:11:19,280 --> 00:11:21,920 Speaker 3: And You're not always going to see big charges on 221 00:11:21,960 --> 00:11:24,040 Speaker 3: your account all the time as a sign of fraud. 222 00:11:24,080 --> 00:11:26,400 Speaker 3: By the way, really it's so easy. You know, people 223 00:11:26,400 --> 00:11:28,440 Speaker 3: put their cards on autopay, they don't necessarily check their 224 00:11:28,440 --> 00:11:31,200 Speaker 3: statements before paying it. You want to check your bank 225 00:11:31,240 --> 00:11:34,839 Speaker 3: statements and your credit card statements every month, maybe more 226 00:11:34,880 --> 00:11:37,599 Speaker 3: frequently than that. You can even set up alerts, so 227 00:11:37,640 --> 00:11:39,520 Speaker 3: whenever there's a charge to your card, you get a text. 228 00:11:39,920 --> 00:11:42,080 Speaker 3: You can set up alerts that will text or email 229 00:11:42,080 --> 00:11:44,520 Speaker 3: you when your bill is due, or when a charge 230 00:11:44,559 --> 00:11:47,559 Speaker 3: over a certain amount is put on your card, or 231 00:11:48,120 --> 00:11:50,599 Speaker 3: when your credit card balance exceeds a certain amount, so 232 00:11:50,640 --> 00:11:52,160 Speaker 3: you know to stop spending things like that. So there 233 00:11:52,160 --> 00:11:54,120 Speaker 3: are all sorts of alerts you can set up just 234 00:11:54,200 --> 00:11:56,640 Speaker 3: to remind yourself, hey, my credit card exists and I 235 00:11:56,679 --> 00:11:58,559 Speaker 3: have to manage it. And it takes a lot of 236 00:11:58,600 --> 00:12:01,520 Speaker 3: the guesswork out of it, because sometimes the first sign 237 00:12:01,559 --> 00:12:04,920 Speaker 3: of fraud is this like two dollars charge for something random, 238 00:12:05,559 --> 00:12:07,360 Speaker 3: and you don't think about it because it's two bucks. 239 00:12:07,520 --> 00:12:09,200 Speaker 3: So when you look at your bill, it's not like 240 00:12:09,360 --> 00:12:13,280 Speaker 3: astronomically high, but that's often a sign that they're just 241 00:12:13,320 --> 00:12:16,600 Speaker 3: testing your card out to see if it's friendly, if 242 00:12:16,600 --> 00:12:19,480 Speaker 3: it'll work really, and then the bigger charges come later. 243 00:12:20,040 --> 00:12:22,520 Speaker 3: So many of the times that I have noticed fraudulent 244 00:12:22,600 --> 00:12:25,600 Speaker 3: charges on my card, they've been very small. So you 245 00:12:25,640 --> 00:12:27,160 Speaker 3: want to check your statement. 246 00:12:27,559 --> 00:12:30,040 Speaker 2: Right And are there any other ways that we could 247 00:12:30,040 --> 00:12:33,680 Speaker 2: go about like detecting fraud or protecting ourselves from like 248 00:12:33,840 --> 00:12:34,640 Speaker 2: identity theft? 249 00:12:35,360 --> 00:12:38,840 Speaker 3: So another thing you can do is check your credit 250 00:12:38,920 --> 00:12:41,800 Speaker 3: reports on a regular basis, So the end of this 251 00:12:41,920 --> 00:12:46,160 Speaker 3: year you can actually get weekly credit reports for free. 252 00:12:46,240 --> 00:12:48,760 Speaker 3: That might be a little much, but from all three 253 00:12:48,800 --> 00:12:52,040 Speaker 3: credit bureaus. You can go to annual credit report dot com. 254 00:12:52,440 --> 00:12:54,439 Speaker 3: Never pay for your credit reports. You are entitled to 255 00:12:54,480 --> 00:12:58,600 Speaker 3: that information for free, So annual credit report dot com 256 00:12:58,679 --> 00:13:00,880 Speaker 3: you can get all three of your credit reports from 257 00:13:00,880 --> 00:13:04,720 Speaker 3: the major bureaus once a week and check them to 258 00:13:04,760 --> 00:13:07,480 Speaker 3: make sure every account on there sounds like something you've 259 00:13:07,480 --> 00:13:09,760 Speaker 3: heard of before. Check them and make sure your name 260 00:13:09,800 --> 00:13:12,000 Speaker 3: is spelled right, that your address is right, that your 261 00:13:12,000 --> 00:13:14,920 Speaker 3: social Security number is right, especially if you have a 262 00:13:14,960 --> 00:13:17,679 Speaker 3: common name. If your name is John or Mary Smith, 263 00:13:18,240 --> 00:13:20,960 Speaker 3: you might have another John Smith's bank account, or credit 264 00:13:20,960 --> 00:13:24,560 Speaker 3: card account or other account on your credit report by accident. 265 00:13:24,840 --> 00:13:27,680 Speaker 3: That just happens unfortunately, So you want to make sure 266 00:13:27,679 --> 00:13:32,480 Speaker 3: that report is error free because sometimes mistakes can cost 267 00:13:32,520 --> 00:13:35,080 Speaker 3: you precious points on your credit score. If there's a 268 00:13:35,080 --> 00:13:36,760 Speaker 3: bill or a debt that you've paid off that should 269 00:13:36,760 --> 00:13:38,400 Speaker 3: have come off of your credit report, it hasn't come 270 00:13:38,440 --> 00:13:41,080 Speaker 3: off yet, it's something you can dispute. So you just 271 00:13:41,120 --> 00:13:43,040 Speaker 3: want to be sure that everything is accurate. 272 00:13:43,880 --> 00:13:45,760 Speaker 2: So when it comes to credit scores, would you mind 273 00:13:45,800 --> 00:13:49,600 Speaker 2: telling us what number or range of numbers is considered 274 00:13:49,679 --> 00:13:52,040 Speaker 2: good and what might be considered bad. 275 00:13:53,080 --> 00:13:58,319 Speaker 3: So credit score ranges, they range from bad. It's like bad, 276 00:13:58,960 --> 00:14:01,120 Speaker 3: which sounds bad, but it's is the terminology they use, 277 00:14:01,160 --> 00:14:06,160 Speaker 3: bad or poor credit, fair or average, good, and excellent, 278 00:14:06,440 --> 00:14:08,920 Speaker 3: and sometimes you might see like very good thrown in there. 279 00:14:08,960 --> 00:14:12,600 Speaker 3: There are different score ranges, but in general, anything above 280 00:14:12,720 --> 00:14:17,679 Speaker 3: like six ninety is good or excellent, and that opens 281 00:14:17,720 --> 00:14:20,040 Speaker 3: a lot of doors in terms of borrowing money, accessing 282 00:14:20,040 --> 00:14:23,720 Speaker 3: credit cards, getting good interest rates on loans, things like that. 283 00:14:24,480 --> 00:14:27,720 Speaker 3: Fair credit is sort of like the high five hundreds 284 00:14:27,800 --> 00:14:31,320 Speaker 3: through the high six hundreds, and then anything below that, 285 00:14:32,080 --> 00:14:34,880 Speaker 3: so three hundred to like five eighty or so is 286 00:14:35,160 --> 00:14:39,400 Speaker 3: bad credit. So if you're keeping tabs on your credit score, 287 00:14:39,400 --> 00:14:42,040 Speaker 3: which you can do with different financial apps like the 288 00:14:42,080 --> 00:14:45,360 Speaker 3: nerd wallet app. You can get a score for free 289 00:14:45,520 --> 00:14:47,920 Speaker 3: that might vvery once you apply for a loan. There 290 00:14:47,920 --> 00:14:50,160 Speaker 3: are different scoring models, so what you get for free 291 00:14:50,200 --> 00:14:51,760 Speaker 3: with an app might look a little bit different from 292 00:14:51,760 --> 00:14:53,880 Speaker 3: if you were to apply for a loan what the 293 00:14:53,920 --> 00:14:56,160 Speaker 3: lender uses. So just keep in mind there are some variances, 294 00:14:56,200 --> 00:14:58,320 Speaker 3: but buying large like the score you can get for 295 00:14:58,360 --> 00:15:00,520 Speaker 3: free on an app is elites help to give you 296 00:15:00,560 --> 00:15:03,400 Speaker 3: an idea of where you are, so use that to 297 00:15:03,400 --> 00:15:05,800 Speaker 3: get a picture of where you are today. And if 298 00:15:05,840 --> 00:15:07,960 Speaker 3: you don't like the number that you see, then that's 299 00:15:07,960 --> 00:15:10,600 Speaker 3: a sign that this is something in your life that 300 00:15:10,720 --> 00:15:12,640 Speaker 3: you should focus on over the next couple of months 301 00:15:12,680 --> 00:15:14,680 Speaker 3: and see what you can do to improve your situation. 302 00:15:15,600 --> 00:15:17,760 Speaker 2: Yeah, it's really important. I mean, like, so my wife 303 00:15:17,800 --> 00:15:20,680 Speaker 2: is European and it's not a huge thing where she's 304 00:15:20,720 --> 00:15:24,040 Speaker 2: from to like have credit. It's a very like American 305 00:15:24,040 --> 00:15:25,640 Speaker 2: concept in a lot of ways. And so when she 306 00:15:25,680 --> 00:15:28,120 Speaker 2: came here and we got married, it was very important 307 00:15:28,160 --> 00:15:29,080 Speaker 2: to be like I was like, hey, you know, we 308 00:15:29,080 --> 00:15:30,560 Speaker 2: want to have a house, we want to have a car, 309 00:15:30,640 --> 00:15:32,160 Speaker 2: we want to like do all the things and so 310 00:15:32,240 --> 00:15:34,480 Speaker 2: I was like, it's really important for you to get 311 00:15:34,480 --> 00:15:36,360 Speaker 2: a credit card. And you know, even if you just 312 00:15:36,400 --> 00:15:38,360 Speaker 2: put like our groceries on it for the week and 313 00:15:38,880 --> 00:15:41,200 Speaker 2: build it up. But it's amazing how quickly if you're 314 00:15:41,280 --> 00:15:44,040 Speaker 2: starting fresh that you can really get into good standing 315 00:15:44,320 --> 00:15:45,440 Speaker 2: if you're responsible. 316 00:15:48,360 --> 00:15:50,480 Speaker 1: We'll be right back with more grown up stuff how 317 00:15:50,480 --> 00:15:58,800 Speaker 1: to adult after a quick break and we're back with 318 00:15:58,880 --> 00:16:00,920 Speaker 1: more grown up stuff to adults. 319 00:16:04,600 --> 00:16:06,800 Speaker 2: I want to get into some credit card dues and 320 00:16:07,000 --> 00:16:09,600 Speaker 2: don't And like I said in the intro, the first 321 00:16:09,720 --> 00:16:12,560 Speaker 2: due that was told to me by my father was 322 00:16:12,720 --> 00:16:16,640 Speaker 2: do pay off your credit card every month. Can you 323 00:16:16,680 --> 00:16:18,760 Speaker 2: get into why that is so important? 324 00:16:19,680 --> 00:16:22,720 Speaker 3: Yeah, So here's how credit card works. Think of it 325 00:16:22,760 --> 00:16:25,120 Speaker 3: like a bar tab. You made purchases throughout the month, 326 00:16:25,240 --> 00:16:27,640 Speaker 3: they get added to your tab. Then at the end 327 00:16:27,640 --> 00:16:29,320 Speaker 3: of the month you got to pay your tab. The 328 00:16:29,320 --> 00:16:33,600 Speaker 3: bartender is ready to collect and you get sent a 329 00:16:33,640 --> 00:16:36,000 Speaker 3: bill with all a list of all the charges that 330 00:16:36,000 --> 00:16:39,480 Speaker 3: you made and assuming everything is accurate, then that's what 331 00:16:39,520 --> 00:16:41,360 Speaker 3: you owe and you have a payment. You have a 332 00:16:41,400 --> 00:16:42,320 Speaker 3: deadline to pay this bill. 333 00:16:42,320 --> 00:16:42,960 Speaker 2: You have a due date. 334 00:16:43,640 --> 00:16:46,280 Speaker 3: If you pay your entire bill by the due date, 335 00:16:46,520 --> 00:16:49,640 Speaker 3: then you don't owe any interests because you have no debt, 336 00:16:49,800 --> 00:16:53,400 Speaker 3: you've paid your bill, you're done, so then the next 337 00:16:53,480 --> 00:16:57,640 Speaker 3: month you start from scratch. Essentially, here's where it gets 338 00:16:57,840 --> 00:17:00,600 Speaker 3: a little bit more complicated, because there is a cost 339 00:17:00,720 --> 00:17:05,000 Speaker 3: to borrowing. Basically, if a financial institution like a bank 340 00:17:05,080 --> 00:17:09,240 Speaker 3: or credit union lends you money, they charge you for that, 341 00:17:09,920 --> 00:17:13,240 Speaker 3: and they charge you while you're in the payoff period, 342 00:17:13,880 --> 00:17:16,480 Speaker 3: and then once you're done paying off what you've borrowed, 343 00:17:16,600 --> 00:17:19,879 Speaker 3: you're done owing money for the privilege of borrowing. And 344 00:17:20,400 --> 00:17:23,480 Speaker 3: so when they talk about APR or interest, when you 345 00:17:23,520 --> 00:17:28,000 Speaker 3: see numbers with percentage signs after them, that is the 346 00:17:28,119 --> 00:17:31,840 Speaker 3: cost of borrowing. And obviously the higher that number, the 347 00:17:31,880 --> 00:17:34,240 Speaker 3: more expensive it's going to be when you don't pay 348 00:17:34,240 --> 00:17:35,879 Speaker 3: the bill in full. And there are lots of reasons 349 00:17:35,920 --> 00:17:38,600 Speaker 3: why people don't. It's not this, oh, well, I'm irresponsible 350 00:17:38,600 --> 00:17:40,400 Speaker 3: and I'm flighty, and I think credit cards are free money. 351 00:17:40,440 --> 00:17:41,960 Speaker 3: Like no, a lot of people are in a pretty 352 00:17:42,000 --> 00:17:45,119 Speaker 3: tough financial situation right now. They're using credit cards for 353 00:17:45,240 --> 00:17:48,760 Speaker 3: essential purchases. They're using them get by salaries or not 354 00:17:48,840 --> 00:17:51,639 Speaker 3: keeping up the cost of living. They're not keeping up 355 00:17:51,720 --> 00:17:54,720 Speaker 3: with groceries and medical bills and childcare and all these things, 356 00:17:54,960 --> 00:17:56,639 Speaker 3: and a lot of people are using their credit cards 357 00:17:56,680 --> 00:17:59,480 Speaker 3: to float these costs. So here's what happens when you 358 00:17:59,520 --> 00:18:02,800 Speaker 3: do that. You run up a bunch of charges. You 359 00:18:02,840 --> 00:18:04,920 Speaker 3: make purchases throughout the month, and you get this bill 360 00:18:05,640 --> 00:18:10,040 Speaker 3: and you have to at least pay a minimum a 361 00:18:10,160 --> 00:18:12,600 Speaker 3: small percentage of the bill, and you'll be told on 362 00:18:12,640 --> 00:18:15,359 Speaker 3: your bill this is what the minimum charges, something around 363 00:18:15,400 --> 00:18:18,480 Speaker 3: two percent of what you actually owe. You can pay 364 00:18:18,480 --> 00:18:22,440 Speaker 3: that minimum amount and your account is considered in good standing. 365 00:18:22,480 --> 00:18:24,920 Speaker 3: The bartender is happy. You've paid enough of your tab 366 00:18:24,960 --> 00:18:29,119 Speaker 3: to keep them quiet for now, But you still have 367 00:18:29,160 --> 00:18:31,480 Speaker 3: a remaining balance that's getting carried into the next month, 368 00:18:32,080 --> 00:18:34,880 Speaker 3: and that's what you owe interest on. And the thing 369 00:18:34,920 --> 00:18:36,560 Speaker 3: with credit cards, and here's how easy it is to 370 00:18:36,560 --> 00:18:40,320 Speaker 3: get into massive amounts of debt with credit cards. When 371 00:18:40,359 --> 00:18:42,199 Speaker 3: you apply for a card and you get accepted, you 372 00:18:42,240 --> 00:18:44,480 Speaker 3: are assigned not just an interest rate, but also a 373 00:18:44,480 --> 00:18:47,879 Speaker 3: credit limit. So let's say five thousand dollars. You can 374 00:18:47,960 --> 00:18:49,960 Speaker 3: spend up to five thousand dollars in a month on 375 00:18:50,000 --> 00:18:54,200 Speaker 3: your card before your card begins to get declined. And 376 00:18:54,240 --> 00:18:57,840 Speaker 3: then once you pay at least the minimum, at least 377 00:18:57,880 --> 00:19:01,480 Speaker 3: that little two percent of your total bill. You carry 378 00:19:01,560 --> 00:19:04,160 Speaker 3: the debt into the next month, but you can charge 379 00:19:04,240 --> 00:19:05,560 Speaker 3: up to the five thousand dollars limit. 380 00:19:05,600 --> 00:19:05,840 Speaker 2: Again. 381 00:19:06,200 --> 00:19:09,160 Speaker 3: It's not like, well, you've only paid you know, five 382 00:19:09,240 --> 00:19:11,600 Speaker 3: hundred dollars off your bill, so next month you can 383 00:19:11,600 --> 00:19:14,440 Speaker 3: only spend forty five hundred dollars because you've you know, 384 00:19:14,560 --> 00:19:17,119 Speaker 3: you still have this set. No, you can charge up 385 00:19:17,119 --> 00:19:17,960 Speaker 3: to the full amount again. 386 00:19:18,160 --> 00:19:18,560 Speaker 2: Wow. 387 00:19:18,800 --> 00:19:20,880 Speaker 3: And then you can only make the minimum payment again, 388 00:19:21,320 --> 00:19:23,000 Speaker 3: and then you charge up to the full amount again. 389 00:19:23,240 --> 00:19:24,760 Speaker 3: And you do that for a couple of months, and 390 00:19:24,800 --> 00:19:29,159 Speaker 3: you're paying like twenty five percent interest on this card. Yeah, 391 00:19:29,200 --> 00:19:32,640 Speaker 3: and suddenly, I mean, you're reaching a point where you're 392 00:19:32,680 --> 00:19:34,200 Speaker 3: just not going to be able to afford to pay 393 00:19:34,200 --> 00:19:34,600 Speaker 3: that back. 394 00:19:34,640 --> 00:19:39,360 Speaker 2: Ever, and every month that you keep this balance, you're 395 00:19:39,359 --> 00:19:42,560 Speaker 2: getting charged very high interest rates. So we're talking like 396 00:19:42,800 --> 00:19:46,560 Speaker 2: between fourteen and twenty five percent interest on what could 397 00:19:46,600 --> 00:19:49,480 Speaker 2: be thousands and thousands of dollars. That adds up so 398 00:19:49,720 --> 00:19:52,120 Speaker 2: fast and it does not stop right. 399 00:19:52,200 --> 00:19:56,080 Speaker 3: According to the Federal Reserve, the average credit card interest 400 00:19:56,160 --> 00:19:58,679 Speaker 3: rate as of February, that's the most recent data we 401 00:19:58,760 --> 00:20:01,399 Speaker 3: have is t point ninety two percent. 402 00:20:02,000 --> 00:20:02,359 Speaker 2: Wow. 403 00:20:02,560 --> 00:20:05,359 Speaker 3: That is the highest it's been since they started keeping 404 00:20:05,400 --> 00:20:08,320 Speaker 3: tabs on this in nineteen ninety four. So it's a 405 00:20:08,359 --> 00:20:08,840 Speaker 3: lot of money. 406 00:20:08,880 --> 00:20:12,160 Speaker 2: That's a lot. Okay, so we do want to pay 407 00:20:12,160 --> 00:20:15,359 Speaker 2: off our credit card bill each month to avoid paying 408 00:20:15,440 --> 00:20:18,880 Speaker 2: that interest. But what about some don't, Like I've heard, 409 00:20:18,920 --> 00:20:21,479 Speaker 2: it's not a great idea to try to withdraw cash 410 00:20:21,680 --> 00:20:22,640 Speaker 2: using your credit card. 411 00:20:23,160 --> 00:20:25,240 Speaker 3: Yeah, so what you just described is what's called a 412 00:20:25,240 --> 00:20:29,200 Speaker 3: cash advance that is a way to basically borrow against 413 00:20:29,200 --> 00:20:32,320 Speaker 3: your credit limit. You use your credit card much like 414 00:20:32,320 --> 00:20:34,040 Speaker 3: you would a debit or ATM card, You go to 415 00:20:34,040 --> 00:20:36,280 Speaker 3: an ATM and you withdraw money. You can also go 416 00:20:36,359 --> 00:20:39,240 Speaker 3: to a bank teller and do this. Don't do this 417 00:20:39,280 --> 00:20:42,640 Speaker 3: if you're not in like a deep, deep emergency situation 418 00:20:42,920 --> 00:20:47,159 Speaker 3: because it is very expensive. Basically, when you use your 419 00:20:47,200 --> 00:20:51,200 Speaker 3: credit card an ATM to get cash, you are subject 420 00:20:51,280 --> 00:20:57,520 Speaker 3: to ATM fees, cash advance fees, and oftentimes a higher 421 00:20:57,560 --> 00:20:59,760 Speaker 3: interest rate than your card already charges. So you might 422 00:21:00,080 --> 00:21:04,879 Speaker 3: a card that charges like twenty one percent normally, but 423 00:21:04,960 --> 00:21:08,359 Speaker 3: then the APR for cash advances is like twenty six percent. 424 00:21:08,560 --> 00:21:10,840 Speaker 3: And remember how I describe it sort of like a 425 00:21:10,880 --> 00:21:12,480 Speaker 3: bar tab, and if you pay it off at the 426 00:21:12,560 --> 00:21:14,960 Speaker 3: end of the month, then you don't owe interest. So 427 00:21:15,800 --> 00:21:17,800 Speaker 3: this is like a bar tab where the interest begins 428 00:21:17,840 --> 00:21:20,439 Speaker 3: to accrue the minute you buy the drink, so instead 429 00:21:20,480 --> 00:21:23,520 Speaker 3: of having that you know you're spending money. You're spending money, 430 00:21:23,520 --> 00:21:25,520 Speaker 3: it's getting added to your tab, and then you have 431 00:21:25,560 --> 00:21:26,840 Speaker 3: the due date and as long as you pay by 432 00:21:26,840 --> 00:21:29,280 Speaker 3: the due date, there's no interest. No, the interest begins 433 00:21:29,280 --> 00:21:31,840 Speaker 3: to get charged well before the due date, so you're 434 00:21:31,920 --> 00:21:34,399 Speaker 3: already paying that really high interest rate on what you 435 00:21:34,440 --> 00:21:37,439 Speaker 3: take out. That's why, if you are in a bind, 436 00:21:38,359 --> 00:21:40,120 Speaker 3: if there are other ways you can get cash, first 437 00:21:40,960 --> 00:21:42,679 Speaker 3: try it like I don't know, tap it to you, 438 00:21:42,760 --> 00:21:45,960 Speaker 3: just use your debit card at your the ATM, borrow 439 00:21:46,000 --> 00:21:48,600 Speaker 3: money from a friend if you have to. Really, a 440 00:21:48,640 --> 00:21:52,359 Speaker 3: cash advance is very very expensive, and credit cards and 441 00:21:52,400 --> 00:21:54,679 Speaker 3: debit cards look identical in your wallet. Let's just make 442 00:21:54,720 --> 00:21:56,320 Speaker 3: sure you're using the right thing when you go to 443 00:21:56,320 --> 00:21:57,080 Speaker 3: the atm. 444 00:21:57,480 --> 00:22:00,879 Speaker 2: Are there any other situations that you'd consider inappropriate to 445 00:22:00,960 --> 00:22:01,960 Speaker 2: use a credit card. 446 00:22:02,600 --> 00:22:05,760 Speaker 3: When you have to make a purchase, you know you 447 00:22:05,800 --> 00:22:08,440 Speaker 3: don't have the cash to pay back, and that can 448 00:22:08,480 --> 00:22:10,880 Speaker 3: happen if, like you know, you need to repair your car, 449 00:22:11,080 --> 00:22:14,000 Speaker 3: or your dog gets sick and has to have surgery 450 00:22:14,160 --> 00:22:18,320 Speaker 3: or I mean, things happen. What's tough is just dealing 451 00:22:18,320 --> 00:22:20,840 Speaker 3: with that in the aftermath and like really buckling down 452 00:22:20,880 --> 00:22:23,200 Speaker 3: and prioritizing paying it back as quickly as you can 453 00:22:23,240 --> 00:22:26,040 Speaker 3: and trying to limit how many months you're in debt 454 00:22:26,119 --> 00:22:28,520 Speaker 3: after a major expense. So it's just something to be 455 00:22:28,560 --> 00:22:31,320 Speaker 3: careful for. The issue is that life happens, and sometimes 456 00:22:31,359 --> 00:22:32,560 Speaker 3: you do have to get into debt. 457 00:22:33,160 --> 00:22:36,440 Speaker 2: Right. Is there such a thing as having too many 458 00:22:36,480 --> 00:22:41,560 Speaker 2: credit cards? And if so and we cancel one, how 459 00:22:41,680 --> 00:22:43,680 Speaker 2: might that affect our credit score? 460 00:22:44,440 --> 00:22:46,840 Speaker 3: Yeah, so there's no right or wrong number of credit 461 00:22:46,880 --> 00:22:48,960 Speaker 3: cards to carry. What's right or wrong for you is 462 00:22:49,000 --> 00:22:51,720 Speaker 3: when you feel like you're in over your head. You've 463 00:22:51,720 --> 00:22:55,000 Speaker 3: gone too far. It's time to scale yourself back. You know, 464 00:22:55,040 --> 00:22:57,639 Speaker 3: if you're carrying let's say you're routinely rotating through anywhere 465 00:22:57,680 --> 00:22:59,840 Speaker 3: from three to five credit cards depending on your habits. 466 00:23:00,520 --> 00:23:03,280 Speaker 3: But you've got your your alert setup, you know when 467 00:23:03,280 --> 00:23:05,760 Speaker 3: your bills are due, you pay your bills on time 468 00:23:05,800 --> 00:23:07,720 Speaker 3: every month. You don't get into credit card debt. You 469 00:23:07,760 --> 00:23:09,800 Speaker 3: feel like you're on top of things. Then you are 470 00:23:09,840 --> 00:23:12,160 Speaker 3: on top of things, and for you, you are in 471 00:23:12,280 --> 00:23:15,919 Speaker 3: a situation that is sustainable. But if you start like 472 00:23:16,000 --> 00:23:18,640 Speaker 3: forgetting a bill due date and you miss a payment 473 00:23:19,080 --> 00:23:21,119 Speaker 3: because you didn't set up the alerts and you forgot 474 00:23:21,119 --> 00:23:26,000 Speaker 3: to you know, and suddenly you are overwhelmed, then that's 475 00:23:26,040 --> 00:23:27,680 Speaker 3: a sign that you need to scale back and it's 476 00:23:27,720 --> 00:23:30,199 Speaker 3: okay to only use one credit card for everything. If 477 00:23:30,240 --> 00:23:32,720 Speaker 3: that's what makes you comfortable and sleep at night, then 478 00:23:33,040 --> 00:23:35,720 Speaker 3: you should sleep at night. That's really one of the 479 00:23:35,760 --> 00:23:38,480 Speaker 3: better things. My advice about your finances is that if 480 00:23:38,480 --> 00:23:40,680 Speaker 3: you're waking up in the middle of night with heart 481 00:23:40,720 --> 00:23:44,600 Speaker 3: palpitations about your money, then something needs to change. So 482 00:23:44,680 --> 00:23:47,560 Speaker 3: long as you're managing everything well, like carry on now. 483 00:23:47,760 --> 00:23:51,920 Speaker 3: Closing cards is another story. It can affect your credit temporarily. 484 00:23:51,960 --> 00:23:53,520 Speaker 3: A lot of people think, well, I'm going to spring 485 00:23:53,560 --> 00:23:56,639 Speaker 3: clean my wallet and I'm going to cut things up 486 00:23:56,640 --> 00:23:58,800 Speaker 3: and throw them away and it's going to feel amazing. 487 00:23:59,520 --> 00:24:02,360 Speaker 3: There can be some repercussions to your credit score if 488 00:24:02,359 --> 00:24:04,240 Speaker 3: you do this. You just want to go about it thoughtfully. 489 00:24:04,280 --> 00:24:06,000 Speaker 3: That's not to say you should never cancel a card. 490 00:24:06,040 --> 00:24:08,600 Speaker 3: I've certainly done that many times. It's just something that 491 00:24:08,640 --> 00:24:12,119 Speaker 3: you want to be a little bit strategic about, especially 492 00:24:12,200 --> 00:24:14,240 Speaker 3: if you're maybe a couple months away from like applying 493 00:24:14,240 --> 00:24:16,240 Speaker 3: for a mortgage or a car loan or something like that, 494 00:24:16,440 --> 00:24:18,840 Speaker 3: because it can lower your credit score temporarily. 495 00:24:18,880 --> 00:24:19,280 Speaker 2: Here's how. 496 00:24:19,880 --> 00:24:23,040 Speaker 3: When you have a bunch of credit cards open, you 497 00:24:23,119 --> 00:24:25,600 Speaker 3: have a total credit limit, which is basically the sum 498 00:24:25,640 --> 00:24:28,640 Speaker 3: total of all the credit limits on those cards. In general, 499 00:24:28,680 --> 00:24:31,159 Speaker 3: we recommend not charging more than thirty percent of that 500 00:24:31,240 --> 00:24:34,080 Speaker 3: total credit limit every month under ten percents. Even better, 501 00:24:34,119 --> 00:24:36,719 Speaker 3: that's your credit utilization ratio. That's the amount of your 502 00:24:36,760 --> 00:24:41,240 Speaker 3: total available credit you use each billing cycle. Maxing out 503 00:24:41,240 --> 00:24:44,000 Speaker 3: your card is bad for your credit. So when you 504 00:24:44,240 --> 00:24:46,440 Speaker 3: have a card, especially if it has a pretty high 505 00:24:46,440 --> 00:24:49,879 Speaker 3: credit limit, by closing it, you're automatically lowering that total 506 00:24:49,880 --> 00:24:52,720 Speaker 3: credit limit, and if you're spending remains the same, you 507 00:24:52,800 --> 00:24:57,040 Speaker 3: might run the risk of exceeding that recommended credit utilization ratio, 508 00:24:57,080 --> 00:24:59,000 Speaker 3: which can affect you over time. So that's one thing 509 00:24:59,040 --> 00:25:01,840 Speaker 3: to think about. Another thing to think about is when 510 00:25:01,840 --> 00:25:05,840 Speaker 3: it comes to your credit score. Age is good. It's 511 00:25:05,880 --> 00:25:08,440 Speaker 3: not like the rest of society where age is not valued, 512 00:25:10,280 --> 00:25:13,879 Speaker 3: but they like to see a high average age of 513 00:25:13,920 --> 00:25:17,680 Speaker 3: your accounts on your credit report. So if you close 514 00:25:17,720 --> 00:25:19,440 Speaker 3: a card that you've held for a really long time. 515 00:25:19,520 --> 00:25:21,360 Speaker 3: Maybe it was your first credit card that you got 516 00:25:21,400 --> 00:25:24,320 Speaker 3: when you were twenty one years old, and now ten 517 00:25:24,400 --> 00:25:27,000 Speaker 3: years later you're closing it and all of your other 518 00:25:27,040 --> 00:25:30,159 Speaker 3: credit cards are really new. Then you're going to dramatically 519 00:25:30,160 --> 00:25:32,239 Speaker 3: lower the average age of your accounts, and that can 520 00:25:32,280 --> 00:25:34,400 Speaker 3: affect your credit as well. 521 00:25:34,560 --> 00:25:35,320 Speaker 2: So those are just. 522 00:25:35,280 --> 00:25:37,200 Speaker 3: Two things to think about. It's not to say you 523 00:25:37,200 --> 00:25:40,080 Speaker 3: should never cancel a card. An alternative to that is 524 00:25:40,200 --> 00:25:42,640 Speaker 3: let's say you've got a card open, you don't use 525 00:25:42,680 --> 00:25:45,040 Speaker 3: it much, or you never use it, it charges an 526 00:25:45,080 --> 00:25:48,040 Speaker 3: annual fee. You don't want to pay that anymore. You 527 00:25:48,040 --> 00:25:50,399 Speaker 3: can call the credit card call the number on the 528 00:25:50,400 --> 00:25:51,960 Speaker 3: back of your card and say, I don't want to 529 00:25:51,960 --> 00:25:53,479 Speaker 3: pay the annual fee for this anymore, but I want 530 00:25:53,520 --> 00:25:55,680 Speaker 3: to keep the account open. Do you have a no 531 00:25:55,840 --> 00:25:58,280 Speaker 3: annual fee card I can switch my account to. And 532 00:25:58,320 --> 00:26:01,119 Speaker 3: if the card issuer has a family of credit cards 533 00:26:01,119 --> 00:26:02,800 Speaker 3: that they offer, they might have something they can switch 534 00:26:02,840 --> 00:26:05,720 Speaker 3: you down to. That's called downgrading your account. It allows 535 00:26:05,720 --> 00:26:08,359 Speaker 3: you to keep the account open, but you're not paying 536 00:26:08,359 --> 00:26:09,800 Speaker 3: for it anymore, and you can keep it in a 537 00:26:09,880 --> 00:26:13,040 Speaker 3: drawer and then maybe like use that card a couple 538 00:26:13,080 --> 00:26:15,720 Speaker 3: times a year, just to keep the account active, because 539 00:26:15,760 --> 00:26:18,880 Speaker 3: accounts can be closed due to inactivity. So maybe put 540 00:26:18,920 --> 00:26:21,399 Speaker 3: like you know, one streaming service subscription on it and 541 00:26:21,440 --> 00:26:23,600 Speaker 3: then put it on auto pay, so that fifteen dollars 542 00:26:23,680 --> 00:26:26,399 Speaker 3: charge is charged every month, and then you know the 543 00:26:26,440 --> 00:26:29,520 Speaker 3: card is active, it's open, but you're not paying for it, 544 00:26:29,560 --> 00:26:32,479 Speaker 3: and so you still benefit from the long credit history, 545 00:26:32,560 --> 00:26:36,320 Speaker 3: from the increased credit limit, but you're not paying to 546 00:26:36,400 --> 00:26:38,720 Speaker 3: keep this account active anymore. So that's one thing you 547 00:26:38,760 --> 00:26:40,639 Speaker 3: can do instead. 548 00:26:44,320 --> 00:26:47,600 Speaker 1: Okay, so sometimes credit card debt happens, but it doesn't 549 00:26:47,600 --> 00:26:51,200 Speaker 1: always mean we're using our cards irresponsibly. If we find 550 00:26:51,240 --> 00:26:54,959 Speaker 1: ourselves in this situation, at the very least, let's ensure 551 00:26:55,040 --> 00:26:58,520 Speaker 1: we're making the minimum payment each month. We'll still be 552 00:26:58,560 --> 00:27:01,679 Speaker 1: in debt, but this way we avoid late fees and 553 00:27:01,760 --> 00:27:05,119 Speaker 1: keep our accounts in good standing. But enough about the 554 00:27:05,119 --> 00:27:08,600 Speaker 1: struggles of credit card usage. Let's get to the good stuff, 555 00:27:08,840 --> 00:27:14,000 Speaker 1: like rewards come on credit card points. Malie needs some 556 00:27:14,200 --> 00:27:15,240 Speaker 1: airline miiles. 557 00:27:18,760 --> 00:27:21,560 Speaker 3: I think a lot of financial products, not just credit cards, 558 00:27:21,560 --> 00:27:25,600 Speaker 3: but loans in general, and different kinds of accounts can 559 00:27:25,640 --> 00:27:27,800 Speaker 3: be thought of like a tool in your toolbox, your 560 00:27:27,800 --> 00:27:31,800 Speaker 3: financial toolbox, and you turn to different tools for different purposes, 561 00:27:31,800 --> 00:27:36,719 Speaker 3: whether you're making purchases, buying a home, saving for retirement, 562 00:27:36,840 --> 00:27:40,320 Speaker 3: investing for other purposes, you want to pick the right 563 00:27:40,359 --> 00:27:43,080 Speaker 3: tool for the job. So let's apply it to credit cards. 564 00:27:43,119 --> 00:27:43,280 Speaker 2: Right. 565 00:27:44,040 --> 00:27:46,840 Speaker 3: If you are in a position in life where you 566 00:27:46,880 --> 00:27:49,600 Speaker 3: can use your card to make your purchases and then 567 00:27:49,600 --> 00:27:52,760 Speaker 3: pay off your bill in full every month and you 568 00:27:52,840 --> 00:27:55,720 Speaker 3: have no debt, then that is a great circumstance to 569 00:27:55,840 --> 00:28:00,560 Speaker 3: look for cards that earn rewards because this way you're 570 00:28:00,600 --> 00:28:04,920 Speaker 3: basically getting a percentage of your spending back just for existing. 571 00:28:05,400 --> 00:28:09,440 Speaker 3: Really like, there's no additional effort really involved other than 572 00:28:09,520 --> 00:28:12,560 Speaker 3: carrying the card. And there are two main kinds of 573 00:28:12,560 --> 00:28:16,760 Speaker 3: rewards cards, cash back and travel. Those are the two 574 00:28:16,760 --> 00:28:18,959 Speaker 3: big ones, and then there are some niche cards as 575 00:28:18,960 --> 00:28:20,919 Speaker 3: well that offer different kinds of rewards, but for the 576 00:28:20,920 --> 00:28:23,720 Speaker 3: most part cash back and travel. Cash back is like 577 00:28:23,800 --> 00:28:26,800 Speaker 3: using a coupon every time you shop. You get somewhere 578 00:28:26,880 --> 00:28:31,000 Speaker 3: between one and six percent back on every purchase, depending 579 00:28:31,000 --> 00:28:32,679 Speaker 3: on which card do you use and where you use it. 580 00:28:33,720 --> 00:28:37,639 Speaker 3: Travel cards earn rewards in the forms of points and miles. 581 00:28:38,320 --> 00:28:41,600 Speaker 3: They're basically two terms that I sort of use interchangeably. 582 00:28:41,800 --> 00:28:43,680 Speaker 3: You don't get to fly one mile because you've earned 583 00:28:43,680 --> 00:28:44,160 Speaker 3: one mile. 584 00:28:45,000 --> 00:28:47,840 Speaker 2: It's not like that, No, not exactly how that works. 585 00:28:48,040 --> 00:28:49,560 Speaker 3: Yeah, I once had to describe that to a friend. 586 00:28:49,600 --> 00:28:51,760 Speaker 3: He's like, so fly to California, that's like three thousand miles, right, 587 00:28:51,760 --> 00:28:53,880 Speaker 3: I'm like, I mean distance wise, yes, but it's also 588 00:28:54,200 --> 00:28:56,000 Speaker 3: it's gonna cost you like twenty thousand miles. 589 00:28:56,480 --> 00:28:57,040 Speaker 2: On a card. 590 00:28:58,360 --> 00:29:01,160 Speaker 3: So with a travel card, you can and earn these 591 00:29:01,160 --> 00:29:04,320 Speaker 3: points and miles through your spending and then apply them 592 00:29:04,400 --> 00:29:09,440 Speaker 3: toward things like flights, hotels, rental cars, even travel experiences 593 00:29:09,480 --> 00:29:12,600 Speaker 3: like tours and stuff like that. So if you have 594 00:29:12,680 --> 00:29:15,280 Speaker 3: a trip in mind over the next year or so, 595 00:29:15,960 --> 00:29:18,920 Speaker 3: you can use your day to day spending to earn 596 00:29:18,960 --> 00:29:21,880 Speaker 3: back a discount on eventual travel, which is very cool, 597 00:29:21,880 --> 00:29:24,240 Speaker 3: which is how I've seen the world in a lot 598 00:29:24,240 --> 00:29:24,760 Speaker 3: of ways. 599 00:29:25,280 --> 00:29:27,280 Speaker 2: Same. I saved up points for a couple two years 600 00:29:27,280 --> 00:29:29,720 Speaker 2: and I went to Thailand and southat Asia for a 601 00:29:29,720 --> 00:29:31,880 Speaker 2: couple of weeks and it was amazing, and yeah, I 602 00:29:31,880 --> 00:29:33,320 Speaker 2: didn't pay for any of the flights. 603 00:29:33,400 --> 00:29:36,080 Speaker 3: Yeah, it's great. I went to like Australia and New 604 00:29:36,160 --> 00:29:38,640 Speaker 3: Zealand and then later to Japan, all in one calendar year, 605 00:29:38,680 --> 00:29:41,080 Speaker 3: and the flights were free, but yeah, it's been very 606 00:29:41,160 --> 00:29:43,720 Speaker 3: nice to have that stockpile. I almost think of my 607 00:29:43,720 --> 00:29:46,800 Speaker 3: travel points from credit cards as my travel savings account. Yeah, 608 00:29:47,480 --> 00:29:48,960 Speaker 3: and so I know what I have to spend on 609 00:29:49,000 --> 00:29:52,680 Speaker 3: this airline or that airline, and it helps me book 610 00:29:52,680 --> 00:29:55,400 Speaker 3: travel and it's something that brings me a lot of 611 00:29:55,480 --> 00:29:58,480 Speaker 3: joy because I really love traveling. So basically, that's how 612 00:29:58,520 --> 00:30:01,720 Speaker 3: you can use credit cards for good for yourself. 613 00:30:02,320 --> 00:30:04,120 Speaker 2: Are there any other ways that you can think of 614 00:30:04,240 --> 00:30:07,520 Speaker 2: to get the most value out of your credit card? 615 00:30:08,040 --> 00:30:12,040 Speaker 3: Yeah, So some credit cards earn the same amount of 616 00:30:12,200 --> 00:30:14,440 Speaker 3: cash back or points no matter where you use them. 617 00:30:14,800 --> 00:30:16,880 Speaker 3: You might see cards that earn one or two percent 618 00:30:16,960 --> 00:30:20,640 Speaker 3: cash back everywhere, or one to two points per dollar 619 00:30:20,760 --> 00:30:25,360 Speaker 3: spent everywhere. But if you're willing to carry more than 620 00:30:25,400 --> 00:30:27,280 Speaker 3: one card and let things get a little bit more 621 00:30:27,280 --> 00:30:32,239 Speaker 3: complicated administratively for yourself, some cards will earn more on 622 00:30:32,280 --> 00:30:34,280 Speaker 3: certain kinds of spending. So you might have a card 623 00:30:34,360 --> 00:30:39,080 Speaker 3: that earns more at grocery stores or at restaurants or 624 00:30:39,120 --> 00:30:42,120 Speaker 3: on gas or if you let's say you carry a 625 00:30:42,160 --> 00:30:44,320 Speaker 3: card for a certain airline, you earn the most points 626 00:30:44,320 --> 00:30:47,680 Speaker 3: when you buy tickets on that airline with that credit card, 627 00:30:48,400 --> 00:30:51,720 Speaker 3: and so that's where you can earn even more. So, 628 00:30:51,800 --> 00:30:54,320 Speaker 3: like let's say you carry three cards. You've got the 629 00:30:54,320 --> 00:30:56,360 Speaker 3: card that earns you know, five or six percent at 630 00:30:56,360 --> 00:30:58,240 Speaker 3: the grocery store, another card that earns you know, three 631 00:30:58,320 --> 00:31:00,640 Speaker 3: or four percent at restaurants, and a card that earns 632 00:31:00,640 --> 00:31:03,840 Speaker 3: two percent on everything else. If food is your biggest 633 00:31:03,840 --> 00:31:06,960 Speaker 3: budget item besides housing, then use the grocery card at 634 00:31:06,960 --> 00:31:10,400 Speaker 3: the grocery store, the restaurant card at restaurants and everything else, 635 00:31:10,400 --> 00:31:12,080 Speaker 3: card on everything else, And that way you're earning at 636 00:31:12,160 --> 00:31:14,680 Speaker 3: least two percent back, but at most six percent back 637 00:31:15,200 --> 00:31:17,040 Speaker 3: on some of the purchases you make most often. 638 00:31:17,720 --> 00:31:20,240 Speaker 2: Are there other situations in where it might be beneficial 639 00:31:20,280 --> 00:31:21,440 Speaker 2: to have multiple credit cards. 640 00:31:22,200 --> 00:31:25,800 Speaker 3: So another thing you can get with rewards cards. You 641 00:31:25,920 --> 00:31:29,360 Speaker 3: might hear them called sign up bonuses, welcome bonuses, welcome offers, 642 00:31:29,400 --> 00:31:32,400 Speaker 3: things like that. In the first year of carrying rewards 643 00:31:32,440 --> 00:31:35,240 Speaker 3: credit cards, if you hit a certain spending minimum in 644 00:31:35,280 --> 00:31:38,760 Speaker 3: the first three to six months. So a common one 645 00:31:38,760 --> 00:31:40,760 Speaker 3: is spend three thousand dollars in the first three months, 646 00:31:41,080 --> 00:31:43,840 Speaker 3: and you'll get anywhere from like twenty five thousand to 647 00:31:44,440 --> 00:31:48,200 Speaker 3: seventy five thousand points in addition to the points that 648 00:31:48,200 --> 00:31:51,480 Speaker 3: you aren't on your spending. That gives you a lot 649 00:31:51,480 --> 00:31:53,160 Speaker 3: of value on a card in the first year you 650 00:31:53,240 --> 00:31:55,920 Speaker 3: carry it. And if you carry multiple cards, you're earning 651 00:31:55,920 --> 00:31:57,680 Speaker 3: these multiple sign up bonuses. And this is how you 652 00:31:57,720 --> 00:32:00,239 Speaker 3: build up what I call the travel savings account. Is 653 00:32:00,760 --> 00:32:03,240 Speaker 3: you might have an airline card, a more general travel 654 00:32:03,320 --> 00:32:07,920 Speaker 3: rewards card, and some banks issue multiple cards that all 655 00:32:07,960 --> 00:32:10,440 Speaker 3: feed into the same rewards system. You see this with 656 00:32:10,560 --> 00:32:13,880 Speaker 3: American Express, with Chase, So you can carry multiple cards 657 00:32:13,920 --> 00:32:17,000 Speaker 3: from the same bank and then combine all those points 658 00:32:17,040 --> 00:32:21,520 Speaker 3: into one rewards account, one pool of points, and then 659 00:32:22,000 --> 00:32:25,200 Speaker 3: you have this big pool of points to spend on yourself, 660 00:32:25,240 --> 00:32:29,440 Speaker 3: to spend on travel, or to spend on reimbursing charges 661 00:32:29,440 --> 00:32:30,480 Speaker 3: you made on your credit card. 662 00:32:31,040 --> 00:32:34,640 Speaker 2: Huge. That's huge, Sarah. I wanted to thank you so 663 00:32:34,760 --> 00:32:37,120 Speaker 2: much for taking the time to chat with us today 664 00:32:37,680 --> 00:32:39,840 Speaker 2: and also wanted to ask you if you have any 665 00:32:39,960 --> 00:32:43,120 Speaker 2: final words of wisdom and where our listeners can find 666 00:32:43,160 --> 00:32:44,240 Speaker 2: you and find nerd Wallet. 667 00:32:44,960 --> 00:32:47,120 Speaker 3: I will leave you with this. If you have credit 668 00:32:47,200 --> 00:32:50,000 Speaker 3: card debt and you're paying interest on it, ignore rewards 669 00:32:50,000 --> 00:32:53,320 Speaker 3: cards for now. Don't do it because the amount of 670 00:32:53,360 --> 00:32:56,640 Speaker 3: interest that you're paying is far offsetting the value of 671 00:32:56,640 --> 00:32:59,720 Speaker 3: any rewards you'll earn. So number one thing, focus on 672 00:32:59,760 --> 00:33:03,040 Speaker 3: pay down that debt and then when you're debt free 673 00:33:03,320 --> 00:33:04,840 Speaker 3: at some point in the future. I hope it's soon, 674 00:33:04,920 --> 00:33:08,200 Speaker 3: because being debt free feels amazing. Then you can turn 675 00:33:08,240 --> 00:33:11,400 Speaker 3: your focus onto rewards points and cash back and miles 676 00:33:11,400 --> 00:33:13,840 Speaker 3: and all that fun stuff. But until you get to 677 00:33:13,880 --> 00:33:17,440 Speaker 3: that point, pay off your debt. Trust me, like that 678 00:33:17,520 --> 00:33:19,160 Speaker 3: will serve you so well in life. So that's my 679 00:33:19,240 --> 00:33:21,440 Speaker 3: number one tip because so many people are like, well, 680 00:33:21,480 --> 00:33:22,840 Speaker 3: I'm gonna like going into debt for this, but I 681 00:33:22,840 --> 00:33:24,360 Speaker 3: really want to get this sign up bonus and I'm like, 682 00:33:24,720 --> 00:33:28,120 Speaker 3: h sign up bonus is irrelevant. Focus on interest rate, 683 00:33:28,160 --> 00:33:30,080 Speaker 3: Focus on how much you can put towards your debt 684 00:33:30,120 --> 00:33:32,479 Speaker 3: every month. Focus on what's going on in your budgets. 685 00:33:32,480 --> 00:33:34,000 Speaker 3: You can apply as much money as you can, be 686 00:33:34,160 --> 00:33:36,640 Speaker 3: as aggressive as you can, and get out of debt 687 00:33:36,680 --> 00:33:39,320 Speaker 3: as quickly as you can. So that's my big nugget 688 00:33:39,360 --> 00:33:39,840 Speaker 3: of wisdom. 689 00:33:40,040 --> 00:33:40,320 Speaker 2: Huge. 690 00:33:40,600 --> 00:33:43,680 Speaker 3: But you can find me on nerdwal dot com. You 691 00:33:43,680 --> 00:33:45,640 Speaker 3: can also find me on nerd walle It's a smart 692 00:33:45,680 --> 00:33:48,400 Speaker 3: money podcast which you can get wherever you get podcasts. 693 00:33:49,200 --> 00:33:52,240 Speaker 3: And we hope to have you as a listener and 694 00:33:52,280 --> 00:33:54,840 Speaker 3: a reader of our work. If you have not heard 695 00:33:54,840 --> 00:33:55,880 Speaker 3: of us before. 696 00:33:56,080 --> 00:33:58,920 Speaker 2: You heard the Woman the Smart Money podcast is fantastic follows. 697 00:33:58,960 --> 00:34:00,880 Speaker 2: Subscribe if you know it is good for you and 698 00:34:00,960 --> 00:34:02,600 Speaker 2: Sarah out there. Thank you so much for spending time 699 00:34:02,600 --> 00:34:03,200 Speaker 2: with us today. 700 00:34:03,320 --> 00:34:04,200 Speaker 3: Thank you for having me. 701 00:34:10,320 --> 00:34:13,160 Speaker 1: Like many things in life, credit cards come with both 702 00:34:13,320 --> 00:34:16,000 Speaker 1: risks and rewards, but at the end of the day, 703 00:34:16,080 --> 00:34:18,840 Speaker 1: they are an important part of building a credit history, 704 00:34:18,880 --> 00:34:21,520 Speaker 1: which can help you buy your first car, home, and 705 00:34:21,640 --> 00:34:24,480 Speaker 1: even set you up for starting your own business. So 706 00:34:24,560 --> 00:34:26,799 Speaker 1: here are some of the more important takeaways that I 707 00:34:26,880 --> 00:34:30,560 Speaker 1: learned from mass conversation with Sarah. Credit cards are not 708 00:34:30,840 --> 00:34:33,480 Speaker 1: linked to checking accounts, which make them much safer to 709 00:34:33,480 --> 00:34:36,839 Speaker 1: shop with. While a fraudulent charge on your debit card 710 00:34:36,960 --> 00:34:40,040 Speaker 1: is taken directly out of your bank account, a fraudulent 711 00:34:40,120 --> 00:34:42,600 Speaker 1: charge on your credit card is just added to your bill, 712 00:34:42,760 --> 00:34:46,920 Speaker 1: keeping your cash safe while you file acclaim. Pay attention 713 00:34:46,960 --> 00:34:49,319 Speaker 1: to your spending habits, and choose a credit card that 714 00:34:49,360 --> 00:34:51,880 Speaker 1: will give you the most reward bang for your buck, 715 00:34:52,080 --> 00:34:55,040 Speaker 1: be it cash back or travel points. Racking up enough 716 00:34:55,040 --> 00:34:57,040 Speaker 1: cash or points can be thought of as a little 717 00:34:57,200 --> 00:35:00,600 Speaker 1: rewards savings account to be used however you see fit 718 00:35:01,360 --> 00:35:04,080 Speaker 1: and finally, think twice before you cancel your card and 719 00:35:04,120 --> 00:35:06,799 Speaker 1: make sure it's necessary. It may have more of an 720 00:35:06,840 --> 00:35:09,360 Speaker 1: impact on your credit score than you think. And remember 721 00:35:09,400 --> 00:35:12,239 Speaker 1: you can always ask your card provider about downgrading your 722 00:35:12,280 --> 00:35:16,399 Speaker 1: account to another card as an alternative option. That's all 723 00:35:16,440 --> 00:35:18,880 Speaker 1: for this episode. Be sure to join us again in 724 00:35:18,920 --> 00:35:21,839 Speaker 1: two weeks as we continue this journey to being more 725 00:35:21,880 --> 00:35:25,400 Speaker 1: responsible adults and healthier humans. Matt, what's our next stop 726 00:35:25,440 --> 00:35:27,120 Speaker 1: on the World of grown Up Stuff? 727 00:35:27,480 --> 00:35:30,759 Speaker 2: Next up, we are learning about finding an apartment, how 728 00:35:30,760 --> 00:35:33,279 Speaker 2: to look for one, negotiating your lease, and what you 729 00:35:33,320 --> 00:35:36,320 Speaker 2: should look for when you're checking out potential places in person. 730 00:35:36,719 --> 00:35:39,040 Speaker 1: Oh, well, that's easy. It's water pressure. I can't move 731 00:35:39,080 --> 00:35:41,000 Speaker 1: into an apartment with bad water pressure. It's just a 732 00:35:41,160 --> 00:35:41,880 Speaker 1: it's a deal breaker. 733 00:35:41,920 --> 00:35:43,239 Speaker 2: It's one of those things you don't think about, but 734 00:35:43,560 --> 00:35:45,120 Speaker 2: when you're in the shower, you gotta have that pressure 735 00:35:45,440 --> 00:35:45,960 Speaker 2: for sure. 736 00:35:46,040 --> 00:35:47,120 Speaker 1: And flushlows toilets. 737 00:35:47,200 --> 00:35:47,959 Speaker 2: Make sure that work. 738 00:35:48,280 --> 00:35:50,920 Speaker 1: And remember you might not be graded in life, but 739 00:35:51,000 --> 00:35:52,320 Speaker 1: it never hurts to do your homework. 740 00:35:52,480 --> 00:35:54,720 Speaker 2: We'll get to it all next time on grown Up Stuff, 741 00:35:54,840 --> 00:35:55,440 Speaker 2: How to Adult. 742 00:35:57,040 --> 00:35:59,960 Speaker 1: This is a production from Ruby Studios at Iheartmatia. 743 00:36:00,480 --> 00:36:03,720 Speaker 2: Our executive producers are Malli Soshia and Matt Stillo. 744 00:36:04,000 --> 00:36:06,040 Speaker 1: This episode was engineered by Matt. 745 00:36:05,800 --> 00:36:09,600 Speaker 2: Stillo and written by Molly Sosia. Special thanks to the 746 00:36:09,680 --> 00:36:13,600 Speaker 2: Ruby team, including Eden fixelm Rachel Swan, Krasnov, Amber Smith, 747 00:36:13,680 --> 00:36:18,880 Speaker 2: nikiath Swinton, Sierra Kaiser, Sierra Spreen, and Andy Kelly. 748 00:36:25,160 --> 00:36:28,239 Speaker 1: The views, information, and opinions expressed during this podcast are 749 00:36:28,239 --> 00:36:31,319 Speaker 1: solely those of the individuals participating in the podcast and 750 00:36:31,360 --> 00:36:34,600 Speaker 1: do not represent those of iHeartMedia It's affiliates or employees. 751 00:36:34,760 --> 00:36:37,640 Speaker 1: This podcast does not constitute financial, legal, or other professional 752 00:36:37,680 --> 00:36:40,840 Speaker 1: advice or services. Material contained in the podcast is for 753 00:36:40,920 --> 00:36:43,960 Speaker 1: general information purposes, only available at the time of publication, 754 00:36:44,120 --> 00:36:47,000 Speaker 1: and no assurance is given that the information is comprehensive 755 00:36:47,080 --> 00:36:50,719 Speaker 1: or individually applicable. Listeners are encouraged to seek independent financial 756 00:36:50,719 --> 00:36:54,520 Speaker 1: and legal advice from reputable professionals concerning all matters discussed 757 00:36:54,560 --> 00:36:54,800 Speaker 1: here in