You Are Not Outsmarting Your Credit Card Company: 5 Things I’ve Learned About Money, Part 2


According to, talking about credit card debt was ranked as the most taboo subject to talk openly about in a survey. It was ranked just as high as discussing the DETAILS OF YOUR LOVE LIFE!! Well, I guess I’m going to make people very uncomfortable in this post, so be prepared!

In my last post I brought up the fact that credit card companies are NOT afraid of your wheeling and dealing. Sometimes when you’re talking to people about credit cards, they will suddenly start speaking in a low voice and tell you their secret plan to defeat their credit card company by paying off their balance every month in order to get the points without paying any interest. They usually follow that up with their “evil plan laugh“. The problem with this is, the statistics don’t show that it’s working. Most credit card holders (including myself at one time) have the mentality that a credit card is a useful tool if used correctly, but it requires strong self-discipline. Ok. Now imagine you have a friend that is an alcoholic and they say to you, ‘Look, the bar is a really great place to make friends and have community. I just have to be self-disciplined when I go in there.” If you want to be a good friend, you’ll tell them they need to steer the hell away from the bar. VISA and AmericanExpress are cashing in on your logic. On the flip side, Warren Buffet and Bill Gates are not going to tell you that they got to where they are because they had a few free flights from their SkyMiles. As a matter of fact, if you research the tips that millionaires and billionaires give for success, the thing they all seem to agree on is living within your means.

I want to throw a few important facts out there for everyone to keep in mind, especially as we go through the holidays:

1) Paying off your balance every month CAN STILL cost you money.

If you are very, very careful you can live that way without going into debt, but there is a really important factor that is left out of most people’s mindsets. There is a psychological factor in how we spend our money. When we use a credit card we are almost ALWAYS inclined to spend more money because we don’t feel the pain of money actually leaving our hands. That means that when you’re spending your “future money” with your credit card, you’re much more likely to say things like, “Go ahead and supersize it and throw in an extra hash brown.” Your cash is flowing out significantly faster with credit cards than it would be with cash or even a debit card. (And in that example, you’re also getting fatter.) As we’re developing even easier ways to pay for things like “the Square” and being able to swipe our iphones at starbucks, it will show in how much faster our money flows out. Source

2) Minimum payments are not designed to encourage you to pay down your balance, they are designed to DISCOURAGE you to pay down your balance.

This one isn’t hard to figure out. Your minimum balance tells you nothing about how much money you can actually afford to throw at your debt. What it really says is, “Give us this little amount of money and you can keep all your toys and you won’t hear from us for a whole month!” The credit card companies know this and it distracts people from the amount of money they lose in interest by only paying the minimum. Decide how much you are going to pay on a card based on how much you can fit into your personal budget, not based on their minimum payment. Source

3) We (myself included) criticize our government for going trillions of dollars into debt. Well, right now American consumers as a whole owe $11.38 trillion in debt. Households with debt owe an average of $15,328 on credit cards, $149,782 on mortgages and $34,703 on student loans. Not quite as much as the government’s debt, but it’s close enough for us to realize that as individuals we might be a part of the economic problem as well. Source

4) Credit card rewards programs do just enough to keep people believing in them. Most airline miles go unredeemed and in the end the rewards just aren’t worth any interest you might pay. Research the statistics on this and think about it from the credit card company’s perspective. Do you think it’s working in their favor or in the favor of the customer? If their customers spend more money by holding their card, they aren’t going to be upset about shelling out a few bucks here and there in rewards. In the end, we are not ‘beating them’ at this game. Source

Since this is apparently a taboo subject I want to say that I hope I don’t ever sound judgmental when I write about money. I started to learn about these things because I have made some major mistakes with money that I’m still paying for. Once I started to learn, I became pretty passionate about sharing some of the information so that other people might not make those mistakes. So I pray that you all make good decisions and experience blessings with money.


A friend of mine has recently started a blog here. In one of his posts, he talked about the power of podcasts. I totally related to it since I’ve started devouring podcasts recently. It started with Dave Ramsey’s daily radio show about money (of course), but now I’ve branched out to Ravi Zacharias, Andy Stanley and a photography podcast. It’s such an underrated bit of technology. After a while listening to these guys every day, it starts to feel like they are actually mentoring me in some form. You can actually start to see your knowledge and wisdom grow by just listening to them while working out or walking to the metro. If you want to get better at something or understand something better, there are tons of free podcasts out there on almost every topic. Look into it.

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