I like credit cards I like the rewards that they come with I like researching them I like getting the signing bonuses and I like getting cash back and points and different things like that but there is kind of a dark side to the industry and there are ways that credit card companies try to completely rip you off and if you are not aware of these then you might fall into some of their traps so in this video I’ve narrowed it down to four of the biggest rip-offs that I see that credit card companies try to get you away they’re kind of scam you with and sometimes they’re pretty easy to fall into so let’s jump into it these are in no particular order but let’s jump into the four ways that I see credit card companies completely ripping you off the first way that credit card companies can completely rip you off is through the yearly fee so oftentimes when you look at a credit card.
You’ll see that along with it comes a yearly fee and oftentimes people don’t pay attention to that they only look at the rewards there and they say oh okay that’s fine and then they go and they get that credit card and then they’re stuck with this yearly fee and oftentimes the yearly fees aren’t that much you know sometimes they can be like 50 75 100 dollars a year and when you break it down month by month that’s not too bad but oftentimes what happens is if the rewards are like one to two percent or something like that you just break even on that yearly fee and you have this weird obligation then and you have to always use that credit card because you don’t want to not make enough to pay off that yearly fee you know you don’t want to get $50 in rewards but they have to pay a $75 yearly fee so you’re always using that credit card there’s that pressure to use it even if you have other cards that may give you better rewards so you don’t remember that behind these yearly fees oftentimes there’s whole teams of economists and different analytics people trying to figure out the best number that they can do.
They’re hoping that you don’t get enough rewards so that you have to pay that yearly fee so it’s okay like if you want to get a reward or a credit card that has a yearly fee just make sure that you will well surpass it or at least break even on it so do your math and know where you’re gonna be using it I currently do not have any credit cards that have yearly fees which is quite nice although down the road I may be getting some because I see some kind of in my future that once I’m spending a certain amount every single month that I see that I can make good money from them so just definitely do the math on it and be aware that often times they can try to rip you off with that yearly fee number two are cash withdrawals so if you’ve ever tried to withdraw money from a credit card or try to turn it into cash you’ll see that the fees on those are pretty crazy.
You have to think kind of from a logical perspective why that is because the bank sees you taking that money out and they kind of see it as giving you a loan and one that you have to pay back now the fees are absolutely crazy I don’t know why anyone would ever take money out in the form of cash and from a credit card you definitely just want to use your checking or even savings account because the fees on their offense will not make it worth it so just to make sure you take that into consideration if you ever thought about you know taking cash out look at the fees to make sure that there are at least reasonable I’ve seen some crazy ones so often times if I’m taking cash out I’m never gonna do with my credit cards I’m gonna do with my debit card that way I don’t have the fees that a credit card brings because the bank sees you like it’s taken out a loan.
So I would just try to stick to your debit card when doing cash withdrawals the number three credit card ripoff are non financial institution cards so you see this most often in moles are big retail outlets if you go there and they try to push their credit card oftentimes that credit card doesn’t have a financial institution behind it so what that means is most credit cards that you get so places like Amazon and Apple they all have financial institutions that back that so for instance I actually just got my Apple card yesterday then the financial institution behind the apple cart is Goldman sacks so most cards will have a financial institution behind it but oftentimes these don’t the finances are kept in house within that specific company which that’s not necessarily a bad thing from the floor front but oftentimes because of that they are as well-run and you can also find just bigger rip-offs and I’ve looked at some store cards and you’ve actually read the fine print there they’re such rip-offs when it comes to just everything you know monthly fee interest rate and different things like that so it is important to be aware of that I try not to get any credit cards.
I don’t even have one yet that is not backed by a major financial institution so just be aware of that because often times when it’s in the company they may not know how to handle it properly and they may spike rates or different things like that and from what I’ve seen they try to just get you to do it based on the sale you can get or cash back at that particular store but then you are also now linked to that store you feel obligated you have to go to that store to get the rewards and especially if there’s a monthly or yearly fee.
Then you really start to feel obligated to go there you can can you start to see the pattern here where with these monthly and yearly fees that come with these credit cards they start to make you have to go there so even if you want to go somewhere else you feel this obligation to go there to get the rewards to pay off that yearly fee and they know that that’s why a big thing I have against these kind of yearly fees when they’re attached to one specific card or one specific company you know they really have to be worth it because you start to feel this obligation like oh shoot.
Now I actually have to use that card so I kind of mentioned that with the first one but I kind of elaborated on that so this one is all about using cards that are non financial institution cards usually they’re a bit of a ripoff number four the last one you guys probably expected this one but that is the unbelievably high interest rate that comes with these credit cards so every time I get a credit card they usually send some paper working on it I look through it and I read the fine print because I’m a nerd financier.
When it comes to that kind of thing and I look at their interest rates and it’s unbelievable I have some I’ve seen some that are about twenty four twenty seven almost thirty percent interest rate which is just it’s crazy and I understand from the standpoint of how kind of scary it can be when you get in credit card debt you know consumer debt is a huge problem in the United States you know billions and billions of dollars of consumer debt and oftentimes it is that snowball of debt that idea that even if you’re not racking up more debt it’s getting larger and larger because of these astronomical interest rates.