If we can choose to stop those who stand to loose a lot of money from credit cards from getting one, should we? Probably best to inform and have each person decide for themselves.
Probably going everybody this is pizza bush as you know on this channel i talk about credit cards a lot as if everybody should get one but this is not the case not everyone should be getting a credit card and it could be quite dangerous for some people now today we’re going to look at some statistics to see which kind of people should completely avoid credit cards
Altogether and not even get one from the beginning did you know that 38% of all americans are actually holding credit card debt this is about one in three people if you average across every single household the average household debt is about $6,000 out of everybody if you take only the people that have some debt and you average across those is actually $16,000 of
Credit card debt now this nice chart is very interesting if you look at the average credit card that categorized by networks you’ll see that over here if you have 0 or less than 0 of network you actually have about $10,000 of credit card debt this is very much in contrast to people who have even a little bit of network what this says is that people that aren’t in
A very good financial footing actually need to lean on credit card debt in order to help themselves out however when you do lean on it you’re actually digging yourself in a bigger hole because every time you borrow a little bit you have to pay a little bit more in interest it’s just that if you borrow now it may not hurt as much now but in the future you’re going
To have to pay it back with interest and so it’s just not going to hurt now it’s going to hurt more later going to the right of this chart is not very interesting yes as you increase your net worth maybe you have a little bit more to spend and so you carry a larger and larger credit card debt people with less than zero amounts of net worth are actually carrying a
Lot more credit card debt and people that actually do have networks this is the category of people that should not have credit card debt at all because this group of people is the one that will hurt the most if you carry a credit card debt you might think hey maybe we make a law where if people have less than zero net worth they cannot apply for a credit card or
They cannot even have one however this is a free country and we’re allowed to inflict pain upon ourselves if we choose to so all these dangers things that we can do too or so we’re free to do it if we want to however is up to us to be informed to choose to not do these dangerous things to ourselves such as blayne smoking you know those things we can do if we want
To but if you want to have a great financial future then you would try to avoid credit card debt if you have less than zero net worth now this next chart shows the cost to carry that set but average apr for a credit card is about 15% this is 15% per year so if you owe $10,000 15% of that is $1,500 now $1,500 for a person that has zero net worth probably means a
Lot of money to them b in $10,000 in debt means you’re forgoing the $1500 every single year so because you’ve done yourself into this hole you lose this $1500 that could have been used to pay something else so if you never dug yourself into that you could have a little bit of extra cash i realize that sometimes you just don’t have a choice and you have to borrow
But do you understand that if you do borrow from a credit card it’s going to hurt a lot more later and you’re going to end up borrowing with the first month and then the next month you go i’m sure a little bit again so you’re going to borrow again and again up until it goes up to the limit and then they’re going to say hey you know you are paying minimum payment
You a pretty good credit card user so let’s raise your limit okay they raise their limit by doubling it or something and then you just keep on borrowing more and more and in the end you’re just going to have this huge gigantic debt that you can never get rid of and probably in financial ruin the next chart here shows the average credit card debt by income now it’s
No surprise that as you make more you’re probably going to have a bigger bigger debt but what’s not shown here is the income is not very much related to your network because someone on the far right here with 150k 160k of income they may have a zero network because they’re just spending it all and then they’re using their credit cards they have this huge credit
Card that was about eleven thousand dollars but yeah if you compare to their income they might be able to pay it off in one month but somehow they’re still carrying this average credit card debt my recommendation here is that if you’ve never gotten the credit card before and you’re trying to decide if you should get one or not the one factor to look at is if you’re
Really good with your finances if you plan to and if you’ve been known to pay for all your bills and stuff you’re pretty on top of everything then yes it might be safe to do so if you are constantly in debt with a credit card you might just want to pay it all off and cut those credit cards up because you don’t want the temptation there to pull you back into debt
Unless you know that you definitely will not get into that again one other indicator of course from the very first chart i showed is looking at your networks if you don’t know how to calculate your network i’ll put my video on how to calculate net worth over here i have a nice excel spreadsheet where you can put in all your numbers and calculate your network most
Likely you kind of know we’re in the ballpark give you are is you are at zero networks if you have let’s say five thousand or ten thousand dollars of network or less it might be better off for you to just hold off on getting a credit card until your net worth is a little bit higher than that threshold i hope this was helpful for you especially if you’re trying to
Decide if you get a credit card or not in order to start building your credit if you’re interested in supporting my channel i do have an audible link down in the video description below or you can also support my channel directly through my patreon link over here don’t forget to give me a like over here and comment down below let me know if you awarding credit
Cards altogether which i really respect if you know that you cannot responsibly use it and don’t forget to subscribe over here thanks for watching
Transcribed from video
Who Should NEVER Get a Credit Card | BeatTheBush By BeatTheBush