CREDIT CARD COMPANIES Keep You POOR On Purpose! (how to fight back)

What's up, Automation Nation? Have you ever wondered how credit cards really work? They promise convenience, rewards, and even cash back. But in reality, there's a system that most of us don't understand. It's designed in a way that can sometimes feel confusing or even frustrating, especially when you're doing your best to manage your money. The truth is, there's a lot going on, and it's not always in your favor. Here's the good news. Once you understand the rules of the game, you can use them to your advantage. Today, I'm breaking down how credit cards operate, what to watch out for, and how to make the system work for you without falling into some common pitfalls. Let's dive in. When you pay with a credit card, you don't see the money leaving your account right away. The disconnect tricks your brain into thinking it's okay to spend more. This is similar to what social media does. Apps like TikTok and Instagram are designed to release dopamine, the feel-good chemical, when you scroll. It feels good in the moment, but doesn't last, and it can leave you feeling stressed over time or, even worse, after a long scroll sesh. Credit cards work the same way. Swiping or tapping gives you a small hit of satisfaction, but it's fake. You're spending money you don't even have. Studies show that people can spend up to 18% more per transaction when using credit cards instead of cash or debit. Think about it. When you go out to dinner and pay with cash, you see those $20 bills leaving your wallet. But with a card, you're just tapping or swiping. That's why credit card companies love it when you choose plastic over cash. And that's why restaurants and stores are happy to take your credit cards. They know you'll spend more. And if you can't pay it back right away, the credit card companies will get rich off the interest. And let's be real. So many people opt into this for an emergency use, meaning you have a flat tire. Hey, we don't have the money to take care of that right now, but we will over time. Oh, we'll just make the minimum payment this month. And then before you know it, you're $30,000 in debt. Okay, here's another move they pull. Let's say you have a $1,000 credit limit and you're using $800 of that each and every month. You're paying it off in full on autopilot. So far, so good, right? Except the credit card companies know exactly what you're doing. Here's the trick. They check your utilization right before the payment clears. It's like they're just waiting to slap you on the wrist and punish you. Even if you pay it off every month religiously, they still count it as 80% utilization on your card, which is considered high utilization and can lower your scores. And I'm going to read this from Understanding Credit Utilization from an Experian Global News blog, which again, Experian is one of the three credit bureaus. In fact, in FICO's most commonly used credit scoring model, debt and credit utilization account for 30% of your overall score, second only to your payment history. This means the closer you are to your credit card limit, the lower your credit score might be. Aim to keep your utilization per credit card as low as possible to safeguard your score. As your utilization ratio approaches 30% of your limits, your scores will begin to decrease much more rapidly. People with the best scores generally have utilization of less than 10% and you never want it to exceed 30%. So the question is, why do they do this? Because they want you to feel like you need this system. They're setting you up to fail, even when you're technically doing everything right. So here's the deal. 30% is good, but if you want the best credit score, aim for 10% or less. And trust me when I say it makes a huge difference. Alright, let's talk about cash back rewards. You know, when you see those ads like, get 5% back on gas, 3% on groceries. Sounds amazing, doesn't it? You know, why not get paid for something you're going to do anyway? The trick is, it's not amazing. Here's how they get you. They know that you're going to spend more chasing those rewards. This highlights the fact that people's behavior is absolutely changed by these credit card company incentives, which has been proven in multiple studies, right? But we mentioned the whole 18% thing earlier. And so people think, oh, I'm going to get 1% to 5% cash back on these cards. But the reality is, the credit card companies know that you are going to spend more to get those rewards. And all it takes is one flat tire or a slip-up, and then before you know it, you're waking up to $30,000, $40,000, $50,000, $70,000 in credit card debt. And I work with people literally every day that this has happened to. So you're getting a little bit back, but you're spending way more to get it. And that's not even the worst part. A lot of people end up carrying these balances. They grow into big balances just chasing these rewards. And once that happens, you're hit with interest charges that absolutely wipes out any benefit you would have gotten from points or cash back. Again, the credit card companies know this and are counting on it. A Federal Reserve study actually confirms this. Influence on spending behavior. Credit card rewards can positively and negatively influence spending behavior. On the positive side, rewards can encourage responsible spending and budgeting. For instance, using a cash back card for everyday purchases like groceries and fuel can lead to substantial savings over time. Similarly, travel rewards can make vacations more affordable, turning aspirational trips into reality. However, the desire to earn rewards can sometimes lead to overspending. A study by the Federal Reserve found that consumers with reward cards tend to spend more than those without. This phenomenon, known as the rewards effect, can result in higher credit card balances and consequently increase debt if not managed properly. So how do you stop losing the game and start winning the game? Here's how to fight back. Number one, put your credit cards on autopilot. Even if you just do the minimum spend temporarily, at least that way you won't miss a payment. But what I recommend for my clients is pay off all your cards, whether you go through my debt consolidation process or not, if you have your credit cards with no balance on them, then at that point use 10% of the utilization to pay for things like Netflix or Spotify or utilities or whatever else, and then put those cards on autopilot. Make sure they get paid off to zero every month. Put them in a drawer if you have to. I recommend for all my clients to get their cards out of their wallets. If they have a big trip coming up, a flight or something like that, and they want to use the cards to get the points, but they know they have cash to pay the cards off, by all means go for it. Again, point number two is keeping the utilization low, 30% is good, 10% or less is optimal. So again, if you've got a thousand dollar limit, only put a hundred, a maximum of $100 on that card. Again, ideally having it paid off to zero each and every month. Step three, again, set it and forget it. Have it auto pay itself to zero. Ideally it's not even in your wallet. Sometimes I recommend clients have one credit card on Apple Pay or Google Pay so that if they're out and about, they're on a trip, something happens, they have the means to solve a financial emergency if needed, but they're not just out there spraying and praying with their card. Again, when you are not carrying your card, you're avoiding temptation like we talk about all the time on this channel. This stops you from chasing the dopamine hits and overspending on things like eating out or impulse purchases or whatnot. Let me read you another client win here. So another big win, my credit score through Chase is up to 740, moving in the right direction. That is awesome. This is what matters, beating the system, keeping things automated and under control so you're not just avoiding the traps, but you're beating them at their own game and building your credit and financial freedom in the process. It's all just about playing the game smarter than they do. The best part is you get to sit back and watch your score climb without really lifting a finger. Here's the deal. Credit card companies have built this system that really takes advantage of you at the end of the day. They're not evil necessarily, but they're not looking out for your best interests. They make money when you carry a balance, when you overspend, when you feel stuck. But now you know the truth. If this helped you, share this information with someone else that could benefit and needs to break this cycle. Also, make sure to check out my video, the five tips to stop living paycheck to paycheck. This is literally the step-by-step system I use for all of my clients. It's all about stacking the deck in your favor to finally break the paycheck to paycheck cycle. Thanks for watching.