Why Can't I Use Credit Cards If I Pay Them Off Every Month

[Music] today's question comes from diane in arizona my husband and i are in baby step two and are working hard to pay off our debt the one issue we struggle with is not using credit cards we use them to pay our utilities groceries and other monthly bills but we never carry a balance by doing this we're able to travel for vacations for free using our points what's wrong with doing this if we're not going into more debt the age-old question dave the age-old question we've been exploring this topic on the fine print because it's one of the biggest objections we get uh here at ramsey are people going well dave i pay off my card every month i get some free stuff what's the harm right so we should clue in bank of america and chase what portion of their marketing is working the best and it is this crap the vacations the points this is the one this is the one that's got people believing in stupidity still after all this time yep and here's what happens and you can listen to the the true cost of credit card rewards this is the second fine print episode that we released and we dug into this with an ex capital one insider okay what did they say uh she said they run 10 000 experiments a year on people to figure out what's going to get them to spend more to use the points and one of the biggest ways they do it is through the points because you know how the points work they don't say it's 500 they say you're going to get 128 000 points that you can use to redeem flights that cost 74 000 and the points change every day and there's blackout dates and there's restrictions and on top of that uh the whole two percent cash back that one is one of my favorites because you know what two percent of a thousand dollars is twenty dollar twenty bucks to spend a thousand and uh that's not a great deal so let me let me get this straight if you spend ten thousand dollars you get 200 bucks ding ding ding that'll make you rich yeah spend ten thousand get two hundred that's a formula for wealth building right there we did an analogy did you people go to grade school listen diane here's the thing we did this analogy in the in the podcast about chuck e cheese because this is what it reminded me of dave you go to chuck e cheese oh my god gives you a ten dollar bill and you get these coins claw on toy story yes so you get your coins and you're so excited to spend those coins that you spent ten dollars on and you go and you get all the tickets and you get 400 tickets and you go to the table at the end of the day and you go wow i can get any prize and they go nope you get sticky hands and a pack of gum and you go wow i spent ten dollars for sticky hands and a pack of gum that cost a quarter yeah and i got screwed yeah i think so uh here's the thing i don't have big buildings dave uh the credit card companies do they're sponsoring every stadium in america and they're doing it with billions of dollars that they're making off of the backs of these people who are overspending you yes yeah so here's the thing um to start with you're not going on vacation for free that is an absolute asinine stupid statement it is not true you might have got your airline ticket for free but everything else on the vacation was not free so you're spending money and you're going on vacation when you should have been working because you're in debt you're not supposed to be going on vacation when you're in debt we follow everything you say no you don't you don't go on vacation when you're in debt and you don't go out to eat when you're in debt you you work and you work and you work and you clean your dadgum debt up and that is that that's the ramsey plan now you can say you can you could go do your plan if you want but don't say you're doing my plan when you're going on vacation because it's just not true and here's the thing the arrogance that is required the intellectual arrogance that is required for you to think that you are taking on billion-dollar companies who have algorithms that know what bottled water you drink and you are somehow beating them and you're you're you're fleecing them you're getting an airline ticket and it doesn't cost you anything you really are pretty arrogant to think that you're actually winning at this game i mean honestly do you understand that when when citibank when you call them your zip code is pulled off your nsx code and the person answering the call if it's a friendly call is a person of the same accent as you if you call from the south you'll get a syrupy southern bell accent and if you call from the wicked northeast you'll get a wicked northeastern accent you're gonna these people screw with you on levels you have no idea and you think you're beating them yeah absolutely incredible so here's the thing we did study we did a study of millionaires we studied 10 000 of them 10 167. not a single one told us we became millionaires with our free vacation points because we ran all our utilities our groceries and everything else through a credit card and then we went on vacation for free and it didn't cost us anything and that's how we built our wealth not one said that isn't that odd diane so here's the thing people that ask this question are people that think they're beating the system let me tell you how you beat the system you don't play don't play in the system you know what it's like it's like being a mouse in the maze and you get to the cheese and you think i won i got the cheese and you zoom out and you go no i'm just a part of a giant social experiment that exists to take my money that's what it is so you can play that game and that's fine you can get your vacations but i'm not in the in the business of trying to gain points i'm trying to gain wealth i want to complete the baby steps i want to pay off my house i want to give outrageously and that doesn't happen by paying off my card every month and reaping the benefits of two percent cash back you know the chucky cheese thing's funny as crap oh it's great the team did a great job with the edits we got the coin sound you got to go with them out of their ski ball or whatever they're just coming out there like crazy you've got this long line of tickets and your little kid they think they're getting the big prizes and you get you never get the big price nothing it's you got you spent 10 to 20 bucks to get a prize that cost less than 50 cents and the same thing's happening when you go to book these flights and you go well we can go to boise yeah i don't think uh martinique was on the list was it no you're not going the bahamas first class i don't think i'm sorry so belize and bermuda are not on the list no no so san diego's nonetheless nashville's not on the list no it's blackout blackout dates it's blackout mean they don't go don't oh no they just won't take you that's what it means i i think you can do a lot better by using a debit card and using cash and saving up for your own dang vacations yeah you know where i go on vacation anywhere you want there you go that's how that works and you know when i use those credit cards that always works so that's how it happens i haven't had a credit card and my gosh it's george it's coming up on 30 years wow we should have a party we should we can't use points to pay for the party though in police i'm in how about cabo let's go to cabo i'm in we're heading there man i'm telling you i love it great question diane but a heart a hard answer yeah well because it's passive aggressive so you need a wrong answer i mean yeah what's wrong with doing this because we're not going into any more debt yes you are you're going into debt because you're not paying off the debt that you have because you're spending money that you don't have to do crap you shouldn't do there's a just there it is it's a simple thing but it's your life darling you get to do what you want to do the problem is you ask our opinion and we are an expert on our opinion we've led more people out of debt and into wealth than any other brand in america today but you do what you want to do kiddo

Channel: The Ramsey Show - Highlights

Views: 359,361

Keywords: the dave ramsey show, budget money debt cash, real estate, insurance, how to make money, dave ramsey, save, credit card, compound interest, buying house, buy, snowball, Why Can't I Use Credit Cards If I Pay Them Off Every Month, credit cards, credit score, credit, credit card debt, credit card rewards, credit cards explained

Id: hR8ul1CIKVo

Length: 8min 7sec (487 seconds)

Published: Tue Sep 07 2021