What's Wrong With A Credit Card If I Pay It Off Every Month?

Jem's in washington we have all our monthly bills paid with our Visa card everything we buy is also paid with Visa we pay off the visa bill on time and have never paid interest on our visa we use our airline miles at least every two years we have no debt and enjoy traveling with free miles what do you say why do you say this is wrong because Jim it's very simple personal finances 80% behavior it's only 20% head knowledge and several different studies have confirmed that when you pay for things with plastic you spend more than when you pay with cash just in your mind right now lay out hundred-dollar bills on the table in front of you and your mind lay out five Benjamin Franklin's in front of you on the table and in your mind lay a piece of plastic down there that says visa on it one of those is activating the emotional center sensors in your brain and the other one is not when you lay Benjamin Franklin down at the grocery store or to buy a piece of clothing or a pair of shoes and he doesn't come back your brain says ouch when you lay a piece of plastic down here's what's interesting and Rachel pointed this out to me a few years ago I hadn't caught this part of it you know when we're kids we learned to trade things you know back in the day you know in the 1930s or 40s you might have traded marbles your grandparents monitor ated a blue marble for a green marble right and some of you might have traded a toy for a different toy and that kind of things you learn too if you give something you receive something there's a there's a transaction has occurred and so when you give the money you receive the item I give them a two hundred to one hundred dollar bills and maybe I get a little change and I get a pair of shoes and I walk away right maybe I get some change and depending on you and where you're buying shoes and so forth right but anyway you see what I'm talking about you hand money over you leave with shoes here's what happens visually with a credit you hand a piece of plastic over they hand it back to you and you leave with that and the shoes and somehow that tells your brain that you just got a good deal that's weird isn't it but you know we don't even think about stuff like that but the studies show that you spend 12 to 18 percent more when using plastic over using plaster using cash and actually Carnegie Mellon published a study done by MIT where they used an MRI function to study this and they hooked up MRIs and to study the brain activity and here's what happened when people bought stuff with cash it activated the pain centers in the brain and when you bought stuff with plastic there was no brain activity no brain that was my part I added that ok but seriously I mean again you're activating the pain centers when you lay uncle Benjamin Franklin down on one of those little black trays in the restaurant we call them Uncle Ben's coffin because you know when you put him in there he ain't coming back right and you can't what do you get back you get back a little piece of white paper this is ouch and if you know you're doing that McDonald's did this McDonald's several years ago when I first started doing this show fast food didn't take plastic that's how long I've been doing the show 25 years right fast food didn't take plastic and it was a big deal it was kind of controversial when McDonald's decided to take plastic but they came out and said oh no no no we've done studies and it's it helps us with shrinkage meaning our employees were stealing and if they're taking plastic we don't have any think egde and you know the consumer its convenience for the consumer and I know not all of that was a lie the actual studies were done by McDonald's they were fabulous they're fabulous marketers and they did all these focus group studies they found that when you walk into McDonald's with a piece of plastic you're saying you know supersize my meal so in the apple pie and I'll pay for his the guy standing behind you right when you walk in McDonald's with cash you're like dollar menu guy behind me you're on your own right and so you spend 78 percent more on average in a fast food setting with plastic than you do with cash that's why McDonald start taking plastic does it increase their particular impulse your butt off is what it amounts to and so and Jim you think you've got this figured out by running everything through visa because I'm sure you're smarter than Chase I'm sure you're smarter than Wells Fargo I'm sure they haven't done any studies that have figured out exactly where you're you know where they're making money on you in spite of this but you've got it figured out you're taking on this multi-billion dollar corporation that are some of the most sophisticated marketers on the planet and you're kicking their butt come on do that's arrogance beyond belief and you know you so but I got a feeling that all of this is wasted on you but I did it for everybody else because you're going to keep doing it because you're brilliant there's that arrogance that goes with this and so that that's what's happening you can just count on it but the truth is is that you are spending more on average well no this is stuff I'd be buying anyway bull bull hey listen go to Disney and you stay on property your room key becomes a debit card that goes to your bill and you can use it anywhere in the Disney parks and you're buying $8 ice cream cones ice cream cones and you didn't think about it and Disney makes it rain every afternoon because their God there and they sell those little little cheap plastic ponchos that they got a buck and a half in and there's some of them for $15 and you put them on your room card you don't think anything about it because you don't want your hair to get wet this is the Dave Ramsey show hey guys thanks for watching if you enjoyed this video click the subscribe button to get the latest content and check out these other great clips from the show now

Channel: The Ramsey Show Highlights

Views: 2,039,487

Keywords: What's Wrong With A Credit Card If I Pay It Off Every Month?, dave ramsey, dave ramsey show, the dave ramsey show, dave ramsey live, credit, credit card, ramsey, debt free scream, dave, dave ramsey live stream, credit score, dave ramsey debt free scream, credit card (industry), credit cards for dummies, how to build credit, credit cards

Id: np5i5oWfqAo

Length: 6min 38sec (398 seconds)

Published: Sun Nov 06 2016