[Music] Foreign Have sent credit card debt into a record High of nearly a trillion dollars and Credit card companies are offering perks To try and get more people to sign up so Javier David is here at Studio 57 with Us to talk a little bit more about what You need to know what you need to watch Out for he's a managing editor for Business and markets at axios and a CBS News contributor so often we have you Here to like talk about the economy as a Whole but today we're talking about Credit cards because the debt has gone Through the roof and What we're seeing are credit card Companies offering really interesting Incentives points travel miles it looks Good cash back Um what are what are some of the Incentives that are being offered so This all leans into a strategy you we've All been talking about this people want To get out more they want experience They want a vacation people like me that Are able to work remotely and can pretty Much work from anywhere we can make Arrangements to be somewhere I'm going To Miami later this week nice not out There but all of that being said they're All of these ways Um but you know you eat out you die now You you a lot of Us store Dash all of
These things sort of add up and so the Companies have found a way to kind of Tap into that vein that desire to go Places be places order out yeah give you A little bit of cash back but what you Have to realize is annual percentage Rates are at a record so regardless of Whether you're getting like if you spend A hundred dollars you're getting maybe What three four five dollars back right That is dwarf is dwarf actually By what you're paying in interest rate So if you've got if you're carrying Balances and you're paying above 20 this Cash back that you're getting isn't Really doing you that much good yeah and There's there's an interesting Um idea out there too Javier maybe you Can explain to our viewers which is that Uh as these credit card companies offer More incentives to certain people a Certain number of people who can afford To have these cards who are not using Debit cards or using cash to pay for Things these incentives actually hurt Those folks who actually don't have Credit cards right well as an analyst of Bankrate said to me like look credit Cards are really really good they're Like you call them like power tools it All depends on how you use it so debit Cards are useful because they're linked To your account they don't allow you to Spend more than what you have a credit
Card can create For Better or Worse an Illusion that you're wealthier than what You have so okay you're going to buy That you know three thousand dollar Purse like you buy it and you pay it off Over time it's really not what you're Spending but what you're paying in the Annual percentage ring that really Starts to add up and if you're carrying A balance for months a month the very Best thing that you can do for yourself In this environment is pay off all of Your balances every month If you can work that system right you That you pay off then do these perks Work in your favor or is it always Leading towards a credit card it's it's Always it does work in your favor if Again like as long as you're not paying Yeah you have to be religious about it And you almost and you uh a good Strategy is also transferring balances In some instances like if you're paying A higher balance on one card you can Transfer to a lower balance there are Incentives to like allow you to do that And not pay interest for a while so it's Just really analyzing you have to really Think about precisely what you're Spending and whether or not the the Amount you're getting cash back and it's Not even just cash back it's sort of Travel points doordash's card will allow You if you're like a doordash power user
Yeah they'll comp you uh the the Membership fee or like well that's what They call it which is you know there are A lot of people out there that are uh Power users of like a lot of delivery Services yeah but the idea being you get More value if you use it Um more frequently but again the the Caveat here is don't carry balance Especially in an interest rate a higher Interest rate environment like we're Living in yeah don't carry balances for Months and that's good advice and I Tried never in fact I have all my cards On auto pay so the balance and it's for The entire balance every month balance But but I always joke with my wife like When I for example I have the Amazon Prime card and you get like money back When you spend on on that card and I'll Buy something ridiculous like a guitar Pedal on on uh Amazon and my wife will Go another guitar pedal I'll say it's Free it's not free explain that to our Viewers because you think hey I didn't Actually pay because yeah you didn't pay But it's again like the money you're Paying and whatever your interest rate Is is again you just got to remember how Much are you carrying how much uh is Your annual percentage rate the best Thing some people credit card companies Will offer you an incentive by like They'll give you more credit Sometimes
The best option is to ask them for a Lower rate if you can Javier I don't Know if you know this but so we know That when the FED raises interest rates We see it like almost immediately when It comes to mortgages right mm-hmm but How does it work with credit cards how Quickly does it change or perhaps go Back if it straight drops right so it's Almost instantaneous these these credits These uh interest rates adjust fairly Rapidly and um again like I mentioned at The top of the conversation these They're at a record high now along with Just the total amount of revolving Credit that people are carrying which is Nearly a trillion dollars the average Card the the interest rate is somewhere North of 20 20 24 actually if I'm not Mistaken wow do the interest rates go Back down as quickly Just lower Um but it I mean it really has to be for A sustained period of time there's a lot Of fluctuations as we know in sort of Interest rates but like credit card Companies will err on the side of Charging you more if they can get away With it they can get away with it they Will Javier always great to have you in Studio brother thank you thank you
