Tag: best credit cards

America's credit card debt topped $1 trillion for the first time this year in the United States despite being the richest nation on the planet there's a pervasive problem a growing epidemic that's quietly reached alarming proportions credit card debt has now breach the daunting threshold of $1 trillion for the very first time as per CNBC 37% of Americans rely on credit cards and debt to cover their monthly expenses and 61% of Americans are trapped into cycle of living paycheck to paycheck as credit card balances continue to grow it begs the question what is going on in America why are so many people falling behind in this video we will examine the intricate web that credit card debt weaves in the lives of many Americans but before we continue allow me to welcome you to another video of Finance sense where we cover all the latest trends in the financial markets and the economy so make sure to leave a like subscribe if you're new to our Channel and please click the notification Bell now without further Ado let's start the United States has recently set a troubling record regrettably it is not positive the nation's credit card debt has now climbed to an unprecedented level for the very first time in its history credit card debt held by Americans has soared to an astounding $1 trillion despite official assurances of a Slowdown in inflation the reality remains that prices persist at elevated levels this has led to a growing Reliance on credit cards to cover daily expenses notably the issue at hand takes on a noteworthy Dimension the typical American is more inclined to engage in discussions regarding politics and religion rather than address credit card debt an alarming statistic reveals that two out of five Americans find credit card debt profoundly embarrassing this situation holds negative implications as credit card debt is poised to impact the broader economy an indicator known as delinquency rates affirms this concern showing an upward trajectory delinquency rates denote instances when individuals fail to meet credit card payment deadlines indicating Financial stress such instances often signify a forboding sign for overall economic health our debt repayment hierarchy usually prioritizes mortgage loans followed by auto loans with credit card debt ranking last consequently this emerging scenario could potentially signal the outset of larger economic challenges individual aged 18 to 29 and 30 to 39 Stand Out Among those most vulnerable to credit card repayment difficulties already a distrusting statistic reveals that one out of every 10 credit card holders faces a delay of 90 days or more in repayment unfortunately the ongoing Persistence of inflation coupled with the looming possibility of heightened interest rates has driven individuals to increasingly open additional credit card accounts in order to manage daily expenses whether you find yourself dependent on credit cards or not the subject at hand holds significance for all the impact of credit card debt eventually reverberates across the entire spectrum of society a substantial portion of Americans exceeding a third experien embarrassment regarding their credit card debt this sentiment occasionally prompts individuals to conceal their financial obligations from their Partners a survey of 2,000 respondents demonstrated that 15% acknowledged spending Beyond levels their significant other would approve with an additional 9% conf in to maintaining hidden credit card debt this Dynamic might also shed light on the pivotal role Financial strain placed in divorces curiously enough it's individuals earning six figures or more who find themselves saddled with prolonged credit card debt the point is that credit card debt occupies a significant place in our thoughts eliciting concern across age groups and income brackets encouraging open discourse about this topic is important as it wields an impact not only on personal relationships but also in the broader National landscape a staggering 54 million individuals have grappled with credit card debt for a span of at least 12 months additionally nearly half constituting 47% of Americans possessing credit cards carry their debt from 1 month to the next the magnitude of this issue becomes apparent when considering that this year's credit card debt growth paralleled that of the stock market for instance this year Foo and ETF representing the S&P 500 registered a 177% increase concurrently credit card debt expanded by 16% this has significant implications reflecting on the historical average returns of the stock market which have ranged from 7 to 10% over a century the present search to 177% is an anomaly worth noting if you among the approximately 190 million individuals in the United States who possess a credit card and your balance hovers around the average of over $5,000 your debt might be growing in $10 with one of the fastest stock market expansions seen in recent times this alignment implies that making substantial savings or accumulating wealth could be unattainable even if you strive to offset your debt through investment although it's reassuring that 37% of Americans manag to clear their credit card balances every month 12% find themselves unable to do so resorting to only the minimum payments consider the impact of this scenario and the extensive duration required to pay off a mere $5,000 credit card balance assuming an average 22% annual percentage rate or APR paying this debt would span 281 months or 23 years accompanied by interest payments surpassing $85,000 depending on the methodology employed to calculate minimum payments and interest such as the 2% balance method used by certain credit card companies your initial $5,000 could increase into a staggering $48,000 of interest in over 106 years essentially this stat could cast a lifelong financial burden possibly even outpacing one's capacity to mitigate it should you find yourself entangled in such an unfortunate predicament consider these steps begin by contacting your card issuer and requesting a reduction in your annual percentage rate initiating this process might be as simple as dialing the number on the back of your credit card and inquiring about an APR adjustment while the reduction might not be substantial a slight decrease can offer assistance a additionally explore the possibility of securing a 0% interest balance transfer card these cards provide 12 15 or even 20 months during which transferred balances incur no interest upon obtaining one adopt a proactive approach to settle as much of the balance as feasible within the introductory span to capitalize on the interest free Advantage however be mindful of the conditions securing approval for such a card is a prerequisite but the potential benefit make the effort worthwhile for individuals carrying a credit card balance taking actions sooner rather than later is advised particularly with the impending growth of student loan interest in September by October 2023 student loan repayments are set to assume the introduction of the on-ramp leniency program offers a positive development as it grants a grace period to those who are late or have missed payments delaying immediate reporting to collection agencies however it's important to note that this program concludes on September 30th 2024 hence refraining from student loan payments under the assumption of no repercussions is not advisable given that interest will continue to accumulate during this interval on a brighter note a superior alternative exists in the form of the save program this program presents an opportunity to significantly reduce payments potentially even Down to0 based on family size moreover while participating in the safe program interest acral is halted securing participation necessitates submitting an application through student a.gov IDR meanwhile credit card debt is one indicator of a broader Trend as the United States has surpassed records in multiple areas household debt has surged to a new high of $17.1 trillion followed by Mortgage Debt at a record 12 trillion auto loans at an unprecedented $1.6 trillion and student loan debt at a Rec $1.6 trillion regrettably these are not Milestones to celebrate contributing to the concerns raised by economists regarding the possibility of an adverse economic downturn intriguingly examining debt as a proportion of disposable income engaging the relationship between Americans earnings and debt obligations yields relatively positive findings Americans possess disposable income that could be allocated toward reducing debt despite the noteworthy levels of debt reached in in the US predicting a recession remains uncertain similar to a coin toss with two potential outcomes hi it looks like you've reached the end of this video thank you for watching this far Please Subscribe and give a like if you enjoyed it and comment your thoughts in the comment section this is finance sense helping you keep up with all the latest trends in the financial markets and the economy see you around

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Hello, friends! I know you are expecting a video on the Pegasus Scandal, But I'd like to wait for a few more days. It's very recent news with
new developments are surfacing every day. So let's wait for a few days. And then I'd make a video on that topic. In today's video, I'd like to continue with the
Financial Education series. The topic of today's video is,
Credit Cards! What are credit cards? How do they work? How do credit card companies make money? And most importantly, Should you be using a credit card? What are the pros and cons? Come, let's find out. Let's use an example to understand. Suppose you're a school student
and suddenly there's a pandemic. All your classes are now online. But to attend these online classes, you'd need a smartphone, but you don't have one. You need to buy a smartphone urgently. But there's insufficient money
in your bank account for buying it. So you ask your parents to
transfer some money to your bank account.

But it'll take 2-3 days to transfer the money. But you need to buy the smartphone
before your class the next day. What other options are there? In such situations, you can use credit cards to make the purchase immediately. And pay for it later. So essentially, a credit card is a card that helps you in purchasing things instantly. But you can pay for them later. At the end of the month. Generally, if there's enough money in your bank account, you withdraw cash and use it to make payments. The second option is to use a debit card. It is directly linked to your bank account. When you make a payment through your debit card, then the money is deducted directly
from your bank account and transferred to the other party. But in a credit card, the bank makes the payment on your behalf. To whomever you're trying to pay.

And then at the end of the month, you repay all the expenses of that month to the bank. You can take more than a month in
repaying the bank's money. Then the bank will charge high interest. Similar to a loan. So you can think of the credit card
as a type of a 'mini loan.' Normally when you take a loan, you can get it in cash if you want to.

But here, instead of a loan,
the bank is giving you a plastic card. With your name and a unique number on it. So that the card can be uniquely identified. As well as the expiry date. How is the payment being processed? There are some payment processing companies. Like Visa and MasterCard. These two are the most popular companies. They basically provide the back-end infrastructure to facilitate credit card transactions. The bank issuing you the credit cards, are distinct from Visa and MasterCard. These two are only involved in the payment processing.

And there is a magnetic strip on
the other side of the credit card. As well as the CVV number. It is very important to keep it safe and secret. Otherwise, you may be a victim of fraud. Now, friends, every credit card has a credit limit. The amount of money that
you can spend with the credit card. Without first paying the bank. If the limit is set at 30,000 Then you can't spend more than 30,000
using that credit card. The credit limit varies from bank to bank. And the type of card you've bought. And the bank checks your salary. It checks your credit score. And decides on your credit limit based on these. If the bank is assured that your salary is adequate that you can afford to pay back the bank then the bank will trust you more.

And you get a higher credit limit. Now, Credit Score is also an interesting concept. If you don't make the credit card payments and loan repayments on time, then the bank will think that it will be quite risky to give you money. It'll be unsure about when you'll repay the advances, if at all. Because the bank takes a risk while giving you a credit card or a loan, to judge this risk, the banking sector has created its grading system.

It grades you. The score ranges from 300 to 900. And it is known as your Credit Score. If your credit score is between 750 and 900, then it is an excellent credit score. It means that the bank can trust you and the risk is very low. But if your score is around 300-400, then the bank can't trust you at all. So your credit score is calculated
based on your previous track record. And on that basis, the bank judges if your credit limit should be high or low.

In fact, whether or not to issue a credit card to you at all. How will you benefit from using a credit card? I talked about one advantage at the beginning of this video. That if you want to buy something immediately, but you want to pay for it later at the end of the month, you can. It helps to meet immediate expenses. The second major advantage is that using a credit card is less risky than using a debit card. If you're a victim of a fraud then in the case of a debit card, the money will be directly deducted from your bank account. But in the case of a credit card, your bank or the credit card issuer will pay on your behalf. And if there's a fraud, they can investigate it. If there's actually a fraud, then they'll get your money back. In India, if there's any fraud with your credit card then the customer's, i.e.

Your, liability is zero. If you report the fraud within 3 days. So the risk of making payments is borne by the bank. The third major advantage is the rewards that you get for using a credit card. The reward systems vary depending on
the bank and the type of credit card. In some, you may get cashback in others, you may get heavy discounts you may even get insurance in some. Like insurance to be paid if you meet with an accident. You can also get travel insurance for free with your credit card. The benefits that you'd get for using it
depends on your credit card. But nowadays, almost every credit card comes with some sort of a reward point system. You can collect the points and can then exchange those points to
buy something expensive. Which credit card is right for you? To decide, you need to remember three main things. First is the bank that will issue your credit card.

Any reward point system, the fees charged by the bank and any hidden fees. These are mostly decided by the banks. Second is which of the credit cards offered by the bank will you be using? There are more rewards for high-level credit cards. The insurances and points are also better. But they often have high fees as well. And the third thing to remember is that which payment network is used in that card? As I said, Visa and MasterCard are the two most common networks. But apart from these, American Express,
Diners Club and RuPay are also used. Although Visa and MasterCard are so common that there is a negligible difference between the two. But if you see American Express, then it differs a lot from these two. Because in most of the places Visa
and MasterCard are accepted but not American Express. But American Express offers better rewards.

I told you that banks decide the reward point system mostly but to an extent, the payment networks also decide about the types of rewards on their network and the benefits to the credit cardholders. Although, it is interesting to note that no more MasterCard cards can be issued in India Because MasterCard violated some guidelines and the RBI notified that though people can keep using the existing MasterCard cards but no more MasterCard cards can be issued.

As long as the MasterCard company does not comply with these guidelines. But overall, the various banks it's equally interesting to note that all of them use a different proportion of MasterCard, Visa and American Express cards. On this chart, you can see which banks use which payment network the most. Banks like RBL and Yes Bank use MasterCard exclusively; 100%. And then there are banks like Kotak that use Visa exclusively; 100%. Since we're talking about banks, let's look at things from the bank's perspective as well. How do these banks profit from credit cards? The most simple way for the banks to earn money is by charging annual fees.

To use some credit cards, you have to make yearly payments. Apart from this, there are many different types of fees charged by the banks. If you are not making timely payments, then a late fee will be charged. If you want to withdraw cash from the credit card, then there is often an extra fee @ 2% – 5%. But friends, you'd be surprised to know that a large portion of these banks' income actually is a result of people's stupidity. Many people don't pay their credit card bills at the end of the month. Because of this, the banks charge a high interest rate on it. And this interest rate can be as high as 30% compounded annually. That's twice or thrice the interest rate on loans. The bank earns a lot of money by charging so high interest rates. And people lose their money. If every person using a credit card, starts paying the bank on time then a major part of the banks' profit will disappear. This is the reason why credit cards aren't popular in some countries. In many European countries, credits aren't used much because the mindset of the people is so that they make all their payments on time.

They don't buy anything if they don't have the money for it. People don't really buy things on EMI in Europe. So credit cards aren't very popular in Europe. As compared to countries like India and the USA. Where people have the habit of buy things even when they don't have enough money. That's why in European markets, alternative banks like N26 and Revolut are gaining popularity. They offer some of the functions of credit cards. These banks issue their debit cards an annual fee is charged on some of them and those debit cards offer rewards like
insurances and stuff.

But the security that you get in a credit card is not offered here. So they're trying to offer some of the functions of credit cards. Similarly, some credit card 'challenger' companies are gaining popularity in India as well. Like Slice. It does not charge an annual fee but gives the user rewards as well as security benefits that one gets in a normal credit card. They offer some other advantages that a normal credit card doesn't. Like their 3-months repayment duration. Whereas a normal credit card's repayment duration is normally 30 days.

They claim that they do not have any hidden charges. This specific company, Slice, works only on Visa. It will be interesting to see how with time, the advantages offered by the credit cards the companies are trying to offer these through various channels in the future. And reduce the disadvantages of credit cards. When the competition among these companies will rise the advantages for us will increase and the disadvantages will reduce. But if we talk of the present, the disadvantages of credit cards might already be evident to you. As I've said, if you don't make the payments on time if you don't pay your credit card bills on time, Then you'd have to pay heavy interest. And fall into a debt spiral very quickly.

Where once you don't make the payment on time, then so much interest is charged that you end up paying a higher amount. You wait for a few more days and the amount increases further. Soon, within some days, or maybe a few months, the amount may become so large that you can't repay. I've also talked about the second disadvantage. There are many hidden fees on credit cards. So the question arises Should you use a credit card? Or should you not? The answer to it is very simple friends. If you make timely payments of the credit card bills, then you can use it. On the other hand, if you use credit cards to buy things that you can't afford, if you think that now I may not have the money, so I'll use the credit card to buy it, and I'll arrange the money from somewhere within 30 days, then please don't use a credit card. You may fall into a debt trap. Third, if you want to get a credit card because of the rewards, then evaluate the situation a bit.

The various fees that you will pay to use that credit card, often the processing fee is around 2% -3%, and the reward that you'd get in exchange, would they actually be worth it? Or are you still losing money? So you'll have to calculate it a bit. Fourth, if you're wary about paying online or anywhere else about falling for a fraud, then use credit cards in such situations to be safe. I hope you found this video informative. Here, I would like to thank the KUVERA app for sponsoring this video. It's a wonderful app for mutual funds where you can invest your money in various mutual funds. By setting your goal. Whether you want to buy a house or a car set this goal on the KUVERA app and the algorithm of this app will tell you which mutual fund will be best for you to invest your money in.

Not only mutual funds but you can compare FDs also. What are the rates of interest on FD
given by different banks? The link is in the description below. Definitely check it out. Comment below the topic that you want the next financial education video to be on. Let's meet in the next video. Thank you very much!.

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Do anything with your credit card Except for these three things or there will be a lot of problems. Number one Let's say your card limit is ₹50,000 And you have spent ₹40,000 this month But you ensure that You make the full payment before the due date. But your Cibil score will not go up, it will drop instead. This is because Your Credit Utilisation Ratio is 80% You use ₹40,000 from the ₹50,000 limit card You should maintain this ratio at 30% That means if you only spend ₹15,000 every month Then your cibil score will slowly increase. Number two Never withdraw cash using your credit card On all other transactions You get an interest free window of 45-50 days But the window is not applicable to cash So never use your credit card in an ATM. Number three It is possible you don't get the full bill amount And only get the bill for minimum payment But you always have to pay the full outstanding amount Otherwise, the remaining money Will be charged with 30%-40% interest The interest free period will be cancelled And you'll have to pay that interest from day 1..

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Ever try to cut up your veggies with a butter knife? You’ll soon realise the time and effort isn’t really worth it. It’s the same with choosing a credit card. Using one that doesn’t suit your needs can leave you with a wilted bank balance and a bad taste in your mouth. Just like knives, there are many different credit cards to choose from, whether you’re a first-timer or want to switch to a new one. So, what are your options and how can you find a card that works for you? The right credit card depends on your goals and spending habits, so start by thinking about what you want the card for. If you want to pay off existing debt, for example, you could start by looking at balance transfer cards. These cards offer a low or 0% introductory interest rate when you move existing debt to the new account.

Or, if you’ve got a big purchase coming up, a card with a 0% purchase rate offer could help you cut down on high-interest charges. Got a sweet-tooth for perks? Rewards and frequent flyer points are a popular way to get more value out of your card – but only if you can afford the higher rates and fees that they often attract. But only if the value you’re getting outweighs the fees, which are usually higher.

There are also cards with low standard interest rates, no foreign transaction fees, no annual fees, complimentary insurance and more. Once you’ve decided what you want the card for, it’s easier to compare your options and focus on the features and costs of individual cards. You can get info about all your options and even apply on Finder. PS, There may be some exclusive card offers you won’t find anywhere else. Check out the link below.

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