The Dangers of Chasing Credit Card Rewards
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- Опубліковано 9 кві 2024
- Spending money shouldn't be so fun, but companies like American Express make it a game you may lose.
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This is the realest video I've ever seen from a credit card youtuber... very good point, of course all of us will still stay addicted to the game lol 😂
Wow! 40 likes is insane, so cool people can connect with the ideas!
Discipline with credit cards is key . If you stay within your budget buy only what you need, you will always come ahead
I remember reading a study years ago that looked at the use of plastic in general (credit or debit). Psychologically, there's a certain amount of negative emotion or "pain" associated with physically counting out your cash and handing it to someone else. This impact is significantly blunted by the ease of just handing over a card (especially when you know you're getting rewards). I think about that a lot when I spend the extra 30 cents for a larger drink and realize I really didn't give it a whole lot of thought. Those little, practically subconscious, charges add up to a lot over time. And it reminds me that banks don't give us rewards and perks out of the kindness of their hearts.
Maybe last century. Cash in the 21st century is money already spent. That number in my bank account though? That can thrill or hurt.
This was such a refreshing video to watch, I could watch it for an hour. It's exactly what I've been feeling ever since I started optimizing my cards six months ago. Of course the companies know what they're doing, they understand the psychology of it all. I'm sure I've spent more money than I think when trying to hit subs and maximizing rewards. It's a game, but it takes a lot of time and energy to figure it all out, and I wonder if I'd be better off just sticking to one or two cards and forgetting about trying to optimize. Great video
Just switch to cash back. Lets be real the MR points are not that epic once you realize how limited your redemptions are. 2 CPP is real only once the stars align. Cash back cards are def more boring but they DO NOT encourage more spend, at least for me.
UR points can be easier to get outsized value out of; especially if you use them with Hyatt.
@@jwil4286 unless ur rich u aint staying in Hyatt
Amex Reward checking is great option. Amex is making some really great improvements this year to the checking account according to the representative I talked to this week.
Cash back is boring but it works so well. I may add more cashback into my setup
@@jakemercure I actually changed my mind over the course of 4 days. Forget the cashback cards. The dopamine from earning MR points is worth the annual fee. Don't get the cashback cards thats for poverty people.
Hey Jake, good video and your right the pitfalls are there if your not doing your due diligence. What I have found that helps me stay on track every month with out fail is I do a zero based budget. I plan out exactly all my income for the month and then track as I go. When and where I can I use a credit card but not more then I have allotted in the budget . Yeah a little bit of work every month but It has definitely kept me on the plus side. Making the card work for me instead of the other way around. Thanks for the video bro 😎
one of your best videos, i think the goal is to get the set up you enjoy and simplify it then once you get a family to just relax and enjoy...
This is real. Glad you said cause I feel like no one else says it. I don’t sign up for big sign up bonus cards if I know I’m gonna be struggling to even meet that spend.
Another thing you do save way more if you use cash. Some places add a tax if you use card, or they’ll give you a discount if you use cash
This is so right on point. Of course the banks are not losing out they sure do know what they are doing. I do try to watch my spending also and I put everything on my chase freedom flex that works for me. I do find the 5% rotating categories do increase my spending. It's 5% after all. Also the hotels extra 5% booked thru Chase travel did push me to book a couple trips... so yea they know what they are doing. Great video!
Oldster here heavy into the hobby. You are correct Jake in that to fully exploit these opportunities you almost need to be financially set enough to not need to use points to obtain that round the world business class flight or top tier hotel status. Be that as it may, fun has been had from Japan to Namibia to Qatar to Singapore to the UK to Helsinki to Madrid...you get my point. Grabbing these redemptions add a bit of smug satisfaction as I climb the mountain called JetLag. You will eat up your Emirates experience and you will forever have sold your soul. And as you age you will amass incredible memories along the way and you will never say at the end of your days, "I wish I did", because you did.
Your are my kids age and you do a great job with transparency. Well done.
Majority of ppl that by default travel/ afford round the world business class, are not CHASING subs.
And again, youth (< 30) should not be sub chasing. Or at least only do so for biz cards.
Thanks for sharing, I'm glad you found value. I agree with you on the incredible memories made, I think a balance is what I'm looking for in this video.
Great video that really makes you reflect and take accountability.
This is facts! Especially because the statements take a little while to post so it takes a minute to catch up
Yes, it can be confusing and awkward to track. Especially since its hard to understand how statements and all that works
You just have to plan around your expenses that never change. If you know you can’t make it to 4K, 6k, 10k or whatever in 3-6 months then simply don’t do it or you will get trapped
This is why i apply cards right around December, the gift season and car insurance really help.
Very refreshing to get someone that isn’t all about “let me run up views” just an honest thought and something I’ve kept in check since I started slowly getting into credit cards. I want to get the chase business ink cash since it has that new sign on bonus. I have to get some work done on my car that I’ll use to reach some of the spend req. My question to you or others would be is this a good card to get in the chase ecosystem (this would be my first chase card and first business card)
Great vid my guy. Always need to be vigilant and check yourself. Sometimes when I feel like you I stop applying for a month and just use a 2% cashback card for like a month to reset the baseline and see what I spent, if I’m overspending and if so, how much. Going for SUBs all the time is best for optimization but it is ok to take a break, get your bearings and when you are ready re-enter the ring.
Of course, you gotta keep the awareness up when going for SUBS. I also give you a bit of credit for sparking this entire video idea, Im glad we can share similar thoughts on this part of the game
Appreciate this style of video as most credit card UA-camrs won’t touch this topic. I personally had to break the cycle of overspending to hit signup bonuses. The other thing credit card UA-camrs don’t touch on is the difficulty of booking those 2+ cpp aspirational business class redemptions they love to glorify. The airlines are constantly devaluing points, availability is difficult to come by, and you need to be willing to reposition airports and have ultimate schedule flexibility. That makes the process so much less appealing.
Credit card UA-camrs always want to say your miles may vary lol
It is very difficult to book. It might not be worth it to do all what you said at the end of the day. Some people just wanna take a vacation and chill
I’m thankful that I am in college right now, because it helps me hit spends throwing my tuiton on it. This is a very valid video. I enjoy bank bonuses more than CC bonuses anyway.
Yep, credit card companies know exactly what they’re doing when they offer these sign-on bonuses. Credit card companies are like “the house” in a casino, they always win. The trick is to try to only use your credit card on things that you would, otherwise, use cash or your debit card for.
Good points, and why I’m experimenting with pseudo-manufactured spending for my current round of SUBs - meeting them through 4868 tax overpayment, balance reloads, insurance prepayments, and Costco shop cards. I’ve found having gift cards leads to fiscal conservation while having a new card at the front of my wallet leads to overspending, as you’ve said. Counting down against a balance vs. counting up to an MSR.
Ideally, you should only participate in that sign up/welcome bonus if you know ahead of time that you're going to be already needing to spend around that amount within 3-6 month period. For example, home or car insurance that is a large amount, usually free to charge on credit card and is expected annually
I look at it this way. When you've got big plans and expected spend, get a new Sign-Up Bonus. When you think your spending will stabilize, take your foot off the gas and lower the velocity. My girlfriend and I are going to Orlando for a Universal/Disney week in less than a month. Our hotels and tickets are already paid for (on a previous SUB). Am I naive enough to believe that I'm still not going to be spending quite a bit while we're there? No? Better get a new SUB.
It really is that simple. Keep a level head and surf the ebbs and flows of your financial life with responsibility.
Once my GF and I move in together, I'm the one whose cards will be used for the majority of the household expenses and she'll just pay me back her end, so I can keep rolling with normal spend. If it gets to the last month and I'm still far away from hitting my goal, I'll just put rent on the card for a month to get over the top. I think what you're saying is only accurate for people chasing like 2-3 bonuses at once, which is a super baller lifestyle that isn't realistic for many people.
Big expenses are very helpful for SUBS. I think that is a great way to think about it
Just put your normal spend on the card and move on. Gas, groceries, subscriptions, insurance, other bills x3/4 months (whatever the requirement is) and boom you’ve met the spending requirement and earned the bonus.
Exactly. That's how I see it as well.
I’m doing that now with my Amex gold to get the 90k welcome bonus. I just moved all my bills other than my house and car from my checking account with no returned to my Amex card where I can get membership points for my normal monthly spend.
I definitely am the person who will get the Guac just because hey "I need to hit a spend requirement anyway" at the same time though, yes I do overspend a bit, but I also accumulate a significant amount of CC Rewards that have been leveraged for free trips. Regardless though this was an awesome video Jake & love to hear your perspective here!
This video is soooooo real! I really liked it. I have seen my behaviour change to sign up bonuses . It’s still useful given you do get perks , you can go see Japan which otherwise you may have not , even if it’s 3k extra & overall cost to you is 2k . But rightfully , our behavior has changed , & I personally feel addicted to adding a new card every 3-4 months just to have a sign up bonus to work towards as regular spending seems pointless . This to me is a form of addiction in a way!
That last half of ur post is a critical and foundational element to the game (not spending for a bonus feels kinda painful) and how they win.
When it’s time to get out the game, that’s what we’ll have to fight/come to terms with. Hopefully it just comes down to being done with coupons, reading fine print, and dealing with customer service and mgt reps👎
Yes it is
Im glad you liked it! Spending awareness is so important especially when working on SUBS. Its easy to get caught up in the thrill of the game
New sign up bonus I hold until my property taxes, house insurance and car insurance is due. Last points redemption I got was Turkish Airline from Zurich to Seattle business class for 45k points which was $4 k cash price which is almost 9 cents per point. Yeah planning is tough and you need to be flexible on travel dates but it works.
On the topic of just chasing rewards, I think I usually have the same rebuttal, without the points and miles game yes, maybe I spend a bit more, (personally about a few % just by rent cc fees), but I also have about 99% more vacations and experiences I could ever think of.
So while it’s a bit of going over so to speak, the experiences made along the way to destinations that otherwise are impossible for the general public, I think will be looked back upon as a good decision in retrospect.
You also have to know when to just do nothing for a bit too ha.
Of course I could be wrong, and regret all the decisions too haha, but it’s a risk either way.
The only constant is change for sure.
Good point, Im flying Emirates Biz class later this year! My 2 year ago broke college self would be like: wtf??
170,000 Amex points can often buy you a nonstop round-trip business that would typically cost around $8000. This is pretty easy to find as long as you’re not traveling in peak season. This is over 4 cents per point. Flights to Asia are often even a better deal, often in the 6-8 cents per point range. Depends on many factors.
For this points game, it's easy to get caught up for some, but i believe a good approach is to find the card that matches your spending. Everyone on youtube raves about the chase trifecta but that system doesn't work for me. There are others that do. Its up to the consumer to match their budgets and credit card rewards.
Nah don't buy extra stuff which you wouldn't buy just for sign up bonus. If that's the case, then don't sign up for a card.
Instead, ONLY apply for a new card when you know you have a large expense coming up soon. e.g. an expensive trip, new computer, expensive car repair, new furniture or home appliance, e.t.c. This is when you apply for a new card. Because when you purchase just ONE of these big ticket items (which might cost $2k - $4k) using the new card you just sign up for, it will skyrocket you halfway into the signup bonus spend. So now you don't have to stress about what you're gonna spend on because you still have 4-6months left. You can just use your card normally and stress-free without trying to purchase extra unnecessary stuff.
I always plan big purchases, and move all spending to that card for a moment. It is difficult for people who are frugal and don’t spend much. Hitting the 4000 ones in three months are a stretch most of the time unless I have big items, like car insurance, maintenance or some college tuition.
I’m guilty when it comes to subs!! Definitely for my Chase Ink business cards! 😭😭
Actually optimizing my spend to maximize points makes me totally aware of what I'm spending and where. Most importantly I make sure I keep no CC balances because that would be counterproductive.
I have quarterly tax estimates that I always use for sign up bonuses. Its trivial if you can hit the spend on a single transaction.
I'm beginning to learn about credit card "hacking" and realized I need to pump those brakes. All these benefits and rewards are only worth it if you were going to spend that money anyways. Also, CC companies have been devaluing and taking away perks from their cards due to people gaming the system. And lastly, I will always try to pay cash at local businesses as it is getting harder and harder for them to stay in business, and having them lose a few % due to transaction fees is not helping. For all these reasons, I'll only stick to cash back cards and stay frugal 😄
Also, the fact that literally all companies are revising company policies, changing warranty terms and removing freebies/perks means the economy is not doing so hot. Save your money people!
I don't want a bunch of annual fee cards because I don't want to pay those fees. Might add a hotel card with the $99 fee but other than the Venture X that's as much annual fee I can handle. Cashback is king for me.
it all comes down to value. Look at the annual fee, and look at what the card in question has to offer. If the cost of the benefits outweigh the annual fee, then you're in the green.
For example, if you like to stay at the Waldorf Astoria (Hilton's most luxurious property brand) at least once a year, the Hilton Honors Aspire card is for you. It comes with an uncapped free night certificate, which will allow the card to pay for itself.
@@jwil4286
If those benefits aren’t even where you live or go it’s worthless , cash back is the way and how I do my trips
To Italy and Ireland etc .
It’s when I go and not In their portal of time and place .
Putting cash back in your bank to use later is always king . Don’t let the cards control your moves .
Great video. So real. I’m sick of all these cc UA-camrs spreading pie and the sky dreams. I’ve been in this game for a while and I know how to search very well. You’re only getting those business class seats for 20k points if you can travel whenever you want, and don’t care about the destination. Which is great for content creators, but for 98% of the population. It ain’t happening. This is a great video reminds me a lot of a chads money minutes video
Glad you enjoyed!
The sign up bonus is all i go after since i plan to spend the money for my brother's business expense then get reimbursed since he has to buy medical supplies anyways. 😊 Then cancel the business cards with AF and keep the cards with no af. Repeat and rinse with other cards. I like Business cards with high AF because they have the highest subs for me and first year is waived for some and also do not affect my credit score. Find a family member who runs a business and ask them if they can use your cards with to hit the sign up bonus and if the card offer 0% apr first 12 months like the Chase INK then they can pay off with no interest within 12 months It's a win win.
Using an app for budgeting really helps avoid this issue.
You are smarter than most people. Takes years for most of us to learn that !
nice to hear ur thoughts on this
thank you
Hey jake. Love the channel. Im a big fan. I appreciate the content you are putting out. I do have a question. The comment section is the only place i thought to ask this. In one of your earlier videos a few months back you told us you were paying off yoir student loan with plastiq.. i wanted to know how that worked for you. I know you said yoi had rhe funds to pay it right off. Did you do it and did it work. ? Thanks again for the channel. Keep up the good work bro.
I paid them off with cash. I gave up on the idea unfortunately since I didn't have a card I wanted enough that would be eligible thru plastiq
If you don’t have a plan on hitting the spend that aligns, correct. Easy to get caught up in the mentality of “well.. I’m hitting a bonus”
Exactly!
I have absolutely overspent when chasing. Now I use the card to pay rent and once I’ve gotten that bonus, I don’t overuse it. Just got approved for Delta Reserve and will be paying rent for two months at $3500 and I should be good.
You gotta learn to think for yourself. Everyone raves about the chase trifecta but I find more value in the C1 duo. Forget about the Amex gold too. I’m not gonna poison myself with shake shack lol
Best new credit card UA-camr
Stay like this bro you’ll go far
Ill keep going
to be frank, I totally do spend more with credit, and I try do a number of things to mitigate that, but I think the real saving grace for me is simply the offers/perks/promotions usually don't ever target gamer weaboo shut-in nerds like myself.
Like if companies had things like status at anime conventions instead of hotels, or discounts on Xbox Gamepass/PS Plus instead of Disney+/Hulu or offers to early purchase limited edition figures/manga/comics, then I would spend way more.
Maybe one day eventually they will come around the same way Netflix and Amazon eventually did
Yeah you area cash back strategy person, I think its easier to spend on travel setups cuz the thrill of 2+ CPP. I also cant use like 99% of the offers, they are just for rich people with discretionary spending problems lolll
I utilize my cards for business expenses so it's easy to accumulate points. I never buy things I don't want or need unless it's travel related. Travel is where I splurge. I would never spend money just to get points that is the wrong way to do this.
Just don’t spend more than you can. If you can’t afford the SUB don’t do it. Also I’m cancelling the Amex gold because the credits are a little goofy. I’ve done that little walk around the block just to use the credits & im done doing it lol. Getting the chase CSP to replace it
Getting business cards to buy regular stuff if the problem…. Personal ones are the problem. In the last two years I paid almost 30k on business spend. I wasn’t doing this game. How many cards would I have hit the spend on with that?!
It sounds like the solution to your concern is to plan.
Rule one only spend in your own means
Never go over
Pay every month
Each year I get about 6,000 in cash back .
I don’t do Uber
Or any store stuff
Just cash back.
I normally spend about 3-4 k a month.
I used to be cash only guy
Me to credit card companies: "I am not in danger... I AM the danger..."
Do you have a webull or Robin hood referral link?
The thing is that these other guys are making so much money on UA-cam videos, that extra spending for points /promos becomes house money
If you or anyone is feel this way while attempting to earn a SUB, then you’re going it wrong. The goal is to use a new card on regular spending buying things you normally do without changing spending habits, resulting in earning a SUB as a literal bonus…
Don’t put yourself into unnecessary stressful debt just to earn a SUB.
Welcome to the matrix, the multiverse is open.
Cash is King 👑😤
Thanks Natalie!
I get free flights to Asia every year with credit cards, it's very frequent that I'll justify like a $20 purchase by going yeah I just got an $1,100 flight who cares.
💯
I don't, I spend 0% more but it takes discipline for sure.
Plain and simple dont use the CC.
Have you looked at the Amex stock price? If you want to participate in the upside, just invest 🤑
I kinda assume that people in the credit card game are already financially literate. So they plan out the sign up bonus spend before they actually do it.
If assumptions were consistently correctly we wouldnt need to get educated or experience. 🥴
We're all just random people talking online, gotta assume the opposite tbh.. Some people have great things to say but some are not so great.
It’s easy to fall into that trap! I’m sure at one point or another we all fall into it. The game ain’t for everyone. We have to be careful 😂
If ur playing the game..ur in it! The only question is how much are YOU overspending?
The credit cards 💳 companies aren’t loosing ANY money. They’re winning 🏆. 1.3 trillion people are in credit card debt and counting 📈 . Folks with excellent credit are paying high annual fees. Smh, yo people need to wake up.
Not just about debt. SUBs motivate to spend. Which means overspending individually, even if just a small amount.
I watched your other video on why you should focus on sign up bonus instead of multipliers after this video and how you explain you get free travel from sub but in this video you talking about how SUB makes you lose to credit card company 😮😮. So what is your final take? Should we go for it or save 😂
Don’t spend money u don’t have to. And do not carry a credit card balance. Pretty simple.
💳
🤑
Don’t fall into that Amex Plat new SUB folks, they just want you to miss those SUB from the green and gold card Lol.