Credit Card Debt Most Dangerous when Interest Rates Rise

**Credit Card Debt Most Dangerous when Interest Rates Rise**



View Time:15:49Minutes



Holders of credit card debt are the most at-risk and in danger when the fed raises it’s benchmark interest rate. With most credit cards being variable rate, debt carrying consumers are advised to pay-off credit card balances in full each month to avoid high interest rate charges or to consolidate to a zero or lower interest rate account, before rates rise further. On the flip-side, many savers and even investors are looking forward to higher interest rates because they will see bigger returns on cash savings in their accounts.

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hey everybody my name is Jason and this is Babu and Bear bust okay today we're gonna talk about who's gonna be most in danger of rising interest rates and also on the flip side who's going to be rewarded most heavily for interest rates rising now before we get to that I just want to do a quick shout-out to all my subscribers thank you very much we're over the 17,000 mark and channel it is continuing to grow so I appreciate it and if you're watching it if you haven't done it already please go down and click subscribe to the home screen there on YouTube and don't forget to click the notification button because I've been getting getting reports from some people that they haven't been getting notified of new videos that we post and also some people say they have set up notifications for this channel but still haven't been getting notified so or notifications have been getting unselected for some reason right also if you look down in description of this video you're gonna see a link to our home page there you can find a link to our bitch shoot page and you can watch their ad free so no commercials if you don't like sitting through the commercials I'll link to our Twitter page and go over there and follow us and you can also if you want to support us go here and you can find a way to support the channel a few different ways in there and even if something as little as buying me a cup of coffee via PayPal in there would be greatly appreciated and it would motivate me to do more videos on the channel so I hope you will consider that okay very important topic today in my opinion being that we're in a rising interest rate environment I think it's very important to put out there the people that are in most danger of rising interest rates alright now I think it's important to show off to show up front here how rates have gotten lower and lower and lower with each recession in this last recession since the financial crisis you hate to see the shaded area right here they had to keep rates near zero throughout the entire Obama administration and they didn't start raising them until Trump got elected and they're actually doing so very gradually okay but if you just look back at history we're absolutely going to be in another recession shortly in my opinion less than six months because every time they've raised rates in the past there's been a recession and with people and maximum debt now and actually at the highest debt levels of all time including the highest credit card debt now is a crucial time to try to pay off that debt and we're gonna talk about why but even though the Fed they did skip the rate hike today November 8th as I'm recording this they are still pushing the narrative that the economy's strong and therefore they need to continue to raise rates and that way they can really sack it to all the people that took on all this debt since the quote-unquote recovery after the financial crisis okay so you have to ask yourself if the economy was really that strong why would they skip a very small tiny rate hike only one quarter of 1% has been the increments that they've been using for these rate hikes and now supposedly the economy strong okay the job markets great unemployment that near 50-year lows but they're still not able to raise that interest rate one-quarter of 1% you got to ask yourself why that is all right could it be that they know they're gonna prick the bubble and everything is gonna come crashing down and now they've got the president out there pointing the finger at them at the Fed at the central banks and their policies and I don't think they know what to do in this case I don't think they know what to do with Trump all right and there's a lot of different theories out there and what's happening behind the scenes that Trump has taken over the Fed but I find that unlikely the feds been in power for over a hundred years they're independent they're unaudited bull they operate in secret they're outside the government they're not a government entity at all they're actually private and basically they're they're they're their own corporation okay so first of all let's look at how bad the debt is this time okay and this doesn't even include mortgage debt so it's actually worse than this but this is non housing consumer debt and we see before the financial crisis had actually peaked here at about little over two-and-a-half trillion now as of just recently it's reported here at the end of the third quarter which is July August and September 2018 we're up to nearly four trillion dollars so we're nearly fifty percent higher than we were at the peak of the financial crisis 2008 era okay so non mortgage debt rolls up all other types of debt including credit card debt K which includes cash advances and balance transfers done on credit cards okay you've got auto loan debt worse than it was in 2008 okay you've got student debt what way worse than it was in 2008 basically everybody is way worse off now than we were during the previous financial crisis okay so it doesn't matter though that people have these enormous amounts of debt now actually the highest debt levels ever of all time okay it doesn't matter to the Fed that's their job is to raise rates when people are in max debt okay of course they're not gonna come out and say that they're gonna look at other things that give them a legitimate reason or what will look like a legitimate reason for them to raise rates they're gonna point to the unemployment number oh look it's 3.7 percent it's great time to raise rates okay well if the economy was that great why just do a quarter of 1% and why skip a rate hike at all why not raise rates every meeting instead of a quarter of one percent raise it by one percent two percent of three percent right it's he the greatest economy of all time why not do that so if you've been watching this channel I think you know why and let's look at the people that are in most danger now with the rising rate environment that we're in ok here's why most credit cards charge a variable interest rate tied to the prime rate okay so the primary it's about three percentage points above the federal funds rate that we just saw the chart on ok so when the federal funds rate changes the prime rate also changes and therefore credit card rates are going to follow ok now also home equity lines of credit are also variable rate loans but typically they're much lower interest rates versus credit cards okay now recently since we've had a few rate hikes in the past year or two it's being recorded that the average APR on a credit card is now 17% okay so these banks are getting ultra cheap money ultra cheap money out of the central banks and out of savers and people that put their money in the banks deposits and savings accounts and checking accounts and CDs well they'll pay out a measly 1 or 2 percent if you're lucky APR is tiny so imagine putting ten thousand dollars in a bank and getting a two percent annual yield so you're bringing back about two hundred dollars a year on your ten thousand dollar deposit after one year it's ridiculous that it's that low right so it punishes savers and it encourages people to not put the money in the bank to go out and just speculate and that's another force that's causing rising prices nobody wants to just sit in cash when rates are so low okay but with rates rising if you have an adjustable rate credit card balance which most of them are you might want to really look at consolidating it into a zero percent and a lot of companies now are offering 0% for a year even 18 months and I've even seen them up to two years usually there's a transaction fee so if you can get a zero or one percent balance transfer offer without a transaction fee that's the best but sometimes you have to pay right around the 3% transaction fee which is most common okay also like we've been reporting here a lot of people are using their home equity to pay off credit card debt that way they can get it into a lower interest rate balance and make the monthly payment on that okay so a little more over now on the average credit card interest rate which is now 17 point one percent according to that's up from sixteen point one five percent exactly one year ago and up from fifteen point twenty two percent two years ago okay so even a small balance let's take 1,000 dollars a year at seventeen percent interest interest rate you're paying one hundred and seventy dollars worth of interest each year based on that average balance of $1,000 in case so getting that high interest rate into a zero percent or promote a low promotional rate is very important and you might want to do that while you still can because a lot of times when rates start going higher those zero credit card balance transfer offers become less common okay also what you can do and this is based out of a study from your a survey from credit cards calm is you can ask your credit card provider for a lower rate so even if you don't qualify for a low or 0% balance transfer offer a lot of times they will look for promotional rates and in different rates that you can qualify for all right and based out of this study from 56% of the people that called and asked their credit card company for a lower rate receive the lower rate okay also 84% had a late payment fee waived just upon asking we're up on request so if you forget to make your payment on time or something happens just reach out and try to give them or try to have them waive one of those fees I actually work for a bank myself and I know for a fact from people that I've spoke with in our credit card Department that they do waive fees in some cases customers will get one fee per year waived but catches customers to ask okay and it's reported that very small percentage percentage of people actually call their credit card company and ask for those better rates and to get their fees waived because most people just aren't aware of it okay now how bad is the credit card debt right now well we know it's higher we showed you the charts along with just about every other type of debt all right but CNBC is reporting that 43% of Americans who've been carrying a credit card balance for two years that means they're not paying their card off for a year and even two years which means they're paying interest every month on their balance because if you don't pay it off then you get nailed with that interest charge and for people that do carry credit card debt the average is almost $17,000 worth of credit card debt and of those people with that debt that credit card debt the average page pays one thousand two hundred ninety two dollars a year interest so it's just such a waste $1,000 worth of your hard-earned money go into some multi-billion dollar corporation with a CEO is making in many cases a hundred times more pay than the front level line employees so I try to pay my credit cards off every month pay him off in full if you can but sometimes things come up it's not always possible expenses medical expenses are high inflation z' causing the price of many things that go up everything from gasoline to groceries okay and I've got a little bit of Suze Orman type of advice I'm not a big fan of Susan women but I think she's right on this you should pay down the higher balances first so if you're gonna pay off debt save your mortgage for last that's generally pretty low interest rate okay car loans can be up there subprime especially eight to ten even up as high as fifteen eighteen twenty percent in some cases so if the car loans your highest APR pay that off first if you can okay and also it's been reported here at a that many cards have annual fees according to this study about twenty six percent of cards have annual fees okay most cars have cards have some sort of late payment fee about ninety eight percent of them okay most of them have that balance transfer fee about seventy nine percent of them so there are cars out there with no balance transfer fee okay foreign transaction fees about fifty two percent cash advance fees about ninety seven percent of them do over the limit fee very small percentage of them do six percent okay return payment fees for bounced checks and things like that for payments okay so real quick and we'll try to wrap this one up who's gonna benefit the most from rising rates well that would be people who are free of debt people that have savings because now your savings account or your CDs or even some checking accounts are gonna start seeing a bigger return right just based on the rising APR and get a bigger yield out of that and investors according to CNBC here are welcoming the rising interest rates so now they can actually make something on their money without always having to be jumping into a trade or always investing in something especially now in this high-risk time when markets seem to be peaking in many areas okay and I'd like to go back to this Fed fund start again here look back in the 80s there when interest rates were approaching 20% so if you had a hundred thousand dollars in the bank you could sit there and collect about eighteen thousand dollars yield each year just by parking your money in the bank in a in a interest earning savings account or even a CD all right and some people look at higher interest rates backwards they say well if rates rise to 20 percent then no one can afford anything everybody's gonna be homeless well no that's not the way it works especially with housing when interest rates are higher that makes the monthly payment higher that means people cannot bid as high of a price for the home and that's one of the things that brings housing prices down when there's higher interest rates okay because lower interest rates causes false demand and causes the prices to get bit up more with that demand well higher interest rates does the opposite it causes less demand and therefore sellers have to lower their prices and if it was up to me I would raise interest rates to 25-30 percent I would love to be able to park money in the bank and actually get something for it but we all know they devalue to our currency okay the banks they get fed ultra cheap money out of the central banks and that further dampens the banks need to actually give us a good return on our savings all right everybody thanks for watching hope to see you down in comments let me know what to think on this or what I might have missed there's always good information that you guys put down there that I miss Hayne hope to see you next time bye everybody you

35 thoughts on “**Credit Card Debt Most Dangerous when Interest Rates Rise**

  1. Brandon Anderson

    Good looking out on the clips J.
    Your on to something and doing alot of things right.
    A lot of trash and egos on you tube. Your standing out with style and education.
    Keep at it homy. Good to see.

  2. Daniel Gutierrez

    Thank you for putting together well thought out pod casts Jason. You will be blessed with hundreds of thousands of followers soon…

  3. Nadia Omari

    If they raise the rates before the holidays it’s gonna hurt financial institutions as well . Retail will go down exponentially

  4. John Wassink

    Credit cards should only used by financially responsible people to get a small return on the money they are going to spend anyway and I don't like using them with small businesses so that their costs are increased. The perks are 1-2% off everything you buy, sign up bonuses, 0% APR deals etc I invest in real estate and bought a rental and put a lot of the renovations on my card with 18 month no interest and I made all the money back in rents and haven't paid that off yet lol. I also bought a bunch of stuff at an auction and made a good chunk of my money back before the bill was due.

    But even responsible people can take the bait and spend more because you can "get more" back

  5. Anthology_Ant584121G Peralta

    Keep going everyone share send in more creator z take in all great people years of collaboration,, God Good do for change Lord see

  6. J T

    The deal is that Trump likes to be in control of everything. He, of course, would not like the Fed because of this.

  7. Naja radio

    I just tried for a better rate and also asked them for payoff with less amount. They say no. I paid them off and learn my lesson. lol

  8. Afghanistan Bananastand

    If student debt is Forgiven it can be a disaster for nearly everyone. People do not realize that if student debt is Forgiven the IRS considers it income and you need to pay taxes on it. The IRS does not send goons to knock on your door or threaten you they reach in and take anything that you have.

  9. Rude Gyal

    I teach people that when you borrow you take away from your future. This report was on point and some people really needs to learn this type of information.

  10. A Babbit

    As a Soldier, in 1983, I had a CD that was giving me 18% interest on my money. Soldiers are/were not paid much back then, but the CD helped. When my wife and I bought our first house, in 1986, the interest on our loan was 11%. The house cost $85,000. I looked up that old house (sold it to make $50,000 in two years!) on Zillow today. It is "worth" $375,000 today!!!! Napa Valley where prunes turned to grapes and grapes make gold (wine for the drinkers, gold for the investors).


    If they keep raising rates, I feel a Bankruptcy a comin up!!!! I don't give a crap about their system.


    I work at Synchrony Bank. I just quit last week. We handle store cards like Gap, Banana Republic, Amazon store card, Home store, and several others. They are all minimum 26% and lower interest are not happening at this bank. Many are at 29%. No forgiveness here. We wave annual late fees courtesy waiver. We all so do an additional sick in the hospital waiver. We also do waiver for not receiving first bill. We also waive it for paying the wrong account number. We also waive for putting in the wrong checking account number to pay it. But after you get too many legit waivers the computer rejects waivers and starts lowering your availability credit as you pay it off. I have seen 6000 dollar limit droppedto 300 dollarsin a day when we find out about other liabilities from other banks two – three tines a day.

  13. palkelbajo

    In reality that sounds ideal but there is no growth that way. With debt system, the economy runs on speculation. If people believe economy is good, they will borrow money from the banks to grow their business and expand it. Therefore more jobs. The more jobs people have the more jobs are created with the money they spend. The best thing you can do is to blame no one but understand that there will always be a recession. Be smart and dont be a victim of it but be prepared and take advantage of the dip.

  14. Precious Metal Head

    My buddy during the last recession had $30k in credit card debt mostly from his business. His Amex card jumped in interest to 23% nearly overnight. That’s like 6-700 a month in interest. It’s such a death trap. Paying my stuff off was the best feeling ever. Never again will I get into credit card debt.

  15. jim smith

    i have 1 credit card for emergencies,keep cash out of banks,do not trust banks,lawyers,priests,government and almost anyone in power,have a great day!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  16. Valeska cat

    i dunno man, credit card rates are high even when the fed rate is 0%. I think it's mortgage holders who will be hurt the most by rising rates, NOT credit card users.

  17. Enlightened One

    Credit cards really got pushed on consumers beginning in the 80's. I was taught to 'live within your means' and not charge more than what I had in my actual bank account. Utilizing credit for daily/monthly expenses when you do not posses the funds to pay them off every billing cycle is self destructive. Credit cards should be utilized for unexpected expenses (car repairs,home repairs,medical expenses etc) not for clothing,food,entertainment ect. I don't put the blame on people. it is a societal paradigm that was created 'by design'…to create a state of constant debt load on the backs of the consumers. Austerity is a foreign term for most people. It's an 'instant gratification' societal paradigm. I want it and I want it NOW! Few have the will power to 'wait' or hold off until they actually have the money. Few people 'save'. I don't mention this fact in relation to 'saving' money to make interest on what you've saved. But no one plans for worst case scenarios or bumps in the road anymore. Sow hen any expense which arises that is 'out of the norm' it causes sheer panic. Very few have a 'buffer', an 'emergency account'. Credit cards can be utilized in such situations. In theory. But in a society that is acclimated to using credit cards for everything, many don't have enough credit card balance remaining on their credit card line of credit that was extended to them to be able to utilize them for this intent…. because they have utilized them to maintain a lifestyle they actually could not afford to have. If you HAVE TO use your credit card to afford yourselves with all of your WANTS and for ALL of your entertainment expenses and most of your fancy designer clothing….you actually can't afford to purchase those wants, and all the fun and all the designer clothes you have. I could speak 'forever' on this subject. As I stated. I don't actually put the blame on 'people' who were encouraged to utilize credit cards in this manner. Society is not told to 'cut back on your spending'….. in fact it is just the opposite. Consume consume consume. 'You were born to shop'. Minimum monthly payment on many credit cards is very affordable for most people.the 'blame' lies on the credit card companies who have issued over the top 'lines of credit' to people. I have had lines of credit extended to me of which would allow me to go into a car dealership and say 'just put it on my Visa'…. I KNOW I have been extended lines of credit that if i were ignorant enough to go out and 'max them out' I'd NEVER be able to pay it back….so 'why' was I issued such ridiculous lines of credit? When my kids were young and we'd be at a store and they would want something that wasn't in the budget ( what's that? a budget? who utilizes a budget these days? Who needs a budget when you have credit cards? Not many budget their money…. and everyone should…..but that's 'no fun' right?) I would say to my kids …I don't have the money for that right now…. they would respond with 'but you have that magic card!' (true story) Magic card. Magically destructive. When they raise the interest rates on credit cards…it's the ones who pay their bills in a short period of time who get screwed. When we had the big housing collapse, I had credit cards that went from 7.99% interest rate to 24.99% interest rate. WTH? I had thought to myself. I pay on time. I carry as little debt load as possible….I can go 3-4 months at a time with no balances on my credit cards at all. So 'why' was I being 'punished'? Cuz that what is is. Punishment. In case you don't know what that 'interest rate' is's so they get as much money from everyone as possible 'up front' in the event you or others default. So by them wanting to now charge me 24.99% interest… they wanted me to pay for those who weren't.Screw that….and I told them so. I still have those lines of credit, I haven't utilized them in over 10 years now.Car dealerships offer lower interest rates to those with good to excellent FICO scores…. but the 7 year loans are a total scam. The worse your credit score on a car loan the higher your rate of interest on the loan….. so how nice of them to offer 7 year loans to the public. Affordable monthly payments at higher rates of interest. Soon you will find that you owe more on your vehicle than your vehicle is worth (called being 'upside down' in the loan….it's the same thing that happened with the housing market and those who utilized 'home equity lines of credit'…. in which you are basically borrowing against the value of your own home….. then your home loses value and now you owe more than it's worth) I forget which company recently sent my spouse a letter which explained they would be eliminating the line of credit they had extended to my spouse unless my spouse utilized the line of credit within the next 60 days. Fine. Let them close it. These entities encourage debt than punish you for it. People just need to stop using them altogether. It's probably too late for that now. The bankers did this to people. ON PURPOSE. that's the thing of it. And it really burns my butt. And please people. Don't fall for those 'consumer debt consolidation' scams either. they destroy your credit…. you can do that yourself for no additional fee. How do they work? They have you hand over all your debt to them…they will then take over and 'manage your debt' for a fee. Manage your debt. You think they're going to be paying on your bills for you. They don't. they collect their fees from you…for how ever many months it may take to 'get this all under control for you' (it varies by situation) What they do is COMPLETELY STOP paying on your debt. you could do that yourself. they communicate with the credit card companies about your debt and once payments have gotten so far behind, credit card companies will look to 'settle the debt'. Say you owe $10,000 of credit card debt to one company…. after they receive no payments on said balance for a period of time they will look to 'settle' the debt so at least they get 'something'. So they may say they will accept a one lump sum of $5000 and consider it 'even'. You can do this YOURSELF! However, if you're going to go that route…you need to be able to have that one lump sum to be able to settle the debt. Ok. I do apologize for the short novel. I feel for people. It really isn't all their fault. Most people who find themselves under financial stress don't even realize that this system was set up and designed to make them fail. They are now getting sucker punched. It's no different than the sub-prime mortgage situation. It was up to those issuing lines of credit to say 'no' to people they knew couldn't pay it back. Guys. We've all been scammed by their system for a long time. Stay here with Jason. this guy knows what he's talking about! HEED his advice and his warnings. you're chances of surviving what's coming drastically increase if you'll put his advice into practice. Much love to all! Stay strong. Spread love and lean on each other. If anyone wants to ask me anything about personal money management, feel free. (I'm not in the arena of stocks and retirement funds and the likes of those things… but I can definitely guide you in the arena of personal money management. God Bless you all!

  18. Jack Drusus

    The Fed raising rates is a sham. One to give the impression that economy is doing well/to cover their backs in case there another lowering them again. Typical double talk/when the economy is doing well they (the government the credit) when things go wrong they blame other factors which they will claim are outside their control..nice one eh?


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