i stopped using my debit card around two years ago for three major reasons that
i'm gonna share with you today in this video now recently i've started getting
a lot of views on this older youtube video that compared a debit card versus a credit
card but there were two major issues with this particular video the first was this is actually
one of my older videos on the channel when i converted this to a finance focused channel
and needless to say it's a little bit rookie number two i did take a little bit of time getting
to the point i think a lot of people missed what i was actually saying and what you could do to hack
a credit card and treat it just like a debit card so i want to take this video and i want to share
with you exactly why i stopped using my debit card and how you can do the same exact thing
without ever going into debt now first of all this is a personal finance channel and on this
channel we talk about building up our wealth so that we can live our ultimate sweet life
and in order to live our ultimate sweet life and build up our wealth we need to despise avoid
and hate going into debt did you know the average credit card interest rate right now is about 16.22
so if you carry a balance on your credit card month over month that means that you're gonna pay
extra money in interest sixteen percent on average this is like the worst way to handle money it's
like losing 16 on the stock market nobody wants that so how do we do this well instead what we do
is we treat our credit card like it was a debit card that means every single time we
swipe that credit card or we tap that credit card or we use apple pay with that credit card
we always track every single transaction every single swipe like it was cash in our transaction
register basically pretending that it's already coming out of your bank account so here's how i do
it i use microsoft excel and let's say for example on august 10th i get a one thousand dollar payday
nice i put in the deposit of one thousand dollars into my transaction register and then i can track
any outgoing expenses such as rent or mortgage payment or anything like that within this register
but then what i do is i use my credit card for all other expenses now this could be things like
going out to eat it could be getting groceries heck it could even be a cell phone bill electric
bill or a water bill doesn't matter i'm going to use my credit card for that and i'll explain why
i do that in just a minute and then what i'm going to do is take it over to my transaction register
and track every single dollar that's going out so i put the description in my transaction register
as cc and that stands for credit card then at the end of the month what i do is i reconcile my
credit card statement to my transaction register then what i do is i pay that balance in full
so remember you've already paid it you already have that cash out of your account you don't need
to worry about finding the money you've already debited it from your transaction register from
your bank account via your microsoft excel document or however you'd like to track
your everyday expenses i live breathe and die by my transaction register i got it loaded up
on my phone i got it loaded up on my computer and every single time money comes out even if i use
my credit card i'm putting it in that transaction register if i get low on cash in the transaction
register i stop spending i don't use my credit cards beyond what i have available in my cash
because if i did guess what happens i'm technically using my credit card
as a credit card and i could potentially get fooled and go into debt and have to pay that
16 interest oh my god we don't want that now why would i go through all of this headache all of
this transaction register stuff why would i do all that well there's three big reasons why number one
added fraud protection number two and this is the big one and why i started in the first place
massive rewards potential and number three a credit score you might be like why do i need
a credit score believe it or not some jobs are now looking at your credit score before they offer you
employment yikes we need to dig into all three of these let's start with number one which is fraud
protection now this is more of a preference and it could depend on your bank but let me give you
a little bit of a story a couple years ago when i was using my debit card only i had an issue
some scammy little you know what decided they got a hold of my
debit card and they wanted to go on a shopping spree pissed me off but they did it anyway
and guess what they did they went to target and they went to a target that is nowhere near my home
that i definitely did not authorize for these payments and here's what happened i checked my
banking account and then i'm like wait a minute what are all these weird target charges from a
target far far away from me in the amounts of twenty five dollars a hundred and twenty dollars
and two hundred and forty dollars i hope whatever they got was worth it but that was a lot of money
now i contacted my bank they did a phenomenal job immediately opening up the fraud case and
starting the investigation but here's the issue the fraudulent charges of the 385 dollars combined
remained out of my checking account which means i didn't have that cash available to spend
until they completed the investigation it took them two weeks before i saw that cash back in
my bank account what if you had a bill that was due and you're waiting for them to hurry up and
fix this now sure some banks might work with you i'm not blasting them for that so instead with a
credit card oftentimes what they'll do is give you provisional credit which means that they'll give
you some credit and say don't worry we got this we'll figure it out and we'll do an investigation
but not only that knowing that i still have cash available and i'm letting mr scammy douchebag
decide to you know get investigated i don't have to worry about that money but number two
and this is the primary reason i started using my credit card like a debit card this is where
it gets exciting guys and this is rewards points now rewards are huge now dave ramsey followers
out there probably like oh god because a lot of times dave mentions in his personal finance you
know he's big on not going into debt and he says that credit cards are smarter than you credit card
companies do a lot of market research they do a lot of work to be smarter than you that's why they
have bigger buildings than you do and their goal is to make money on you but remember for a second
to dispel that little dave ramsey thing remember we're using our credit card like a debit card
and we're tracking every single expense out of our cash account via the transaction register
we're not going above and beyond that so that money that's already out of your account is gone
and you already tracked it and as long as you're responsible with your money and you only use it
for that purpose banks are going to lose in fact banks hate when you do this banks hate when you
use your credit card the right way because what happens is they're paying you rewards and they're
not getting that interest charge they hope you screw up on they're hoping someday that you're
going to miss a payment they're hoping someday that you have to carry a balance month over
month and they get to charge you that 16 interest but you're smarter than that and for that you get
rewards now right now my american express credit card account i have a cash back reward balance of
429 which means i can cash that out that's 429 and get a credit card statement what i actually
do is i save that up throughout the entire year and i use whatever is at the end of the year for
christmas gifts in december so got a little bit of ways to go yet but 429 is a nice christmas and
it's only august as of the recording of this video so i'm kind of excited about it now i use this
american express card for all of our groceries we're a family of four we spend a lot on groceries
we use it for gas and luckily american express the credit card i have gives me high percentage
cash back and i think that's really kind of cool now if you don't want the cash back you can also
do travel rewards a lot of people go on amazing vacations and they take their family for little
or no money based on travel points now remember this is money you're already gonna spend you make
yourself a budget you don't just say oh because i have a credit card why don't i just go ahead and
buy a tv no because you're drawing down on your cash you don't want to do that don't buy things
that you don't need buy things that you need based on your budget now rewards are not going to make
you rich that's not the point of it the point is it's a nice little cherry on the top of the cake
that's what i love about using my credit card like a debit card now you might be like i i get it but
i still don't like the idea okay there's another way you could actually get a debit card that gives
you rewards like a credit card now i've talked about this before it's called the point debit
card and what makes this one nice it's almost like a prepaid debit card what you do is you
take what's in your bank and you can transfer a certain amount of money into your point app
with that money you can then use your debit card for maybe your monthly expenses maybe you say hey
i'm going to give myself a budget of 100 to 200 every month to go out and eat so i'm going to
transfer 100 or 200 into my point app and use the point debit card for eating out at restaurants and
what's really cool about point is they offer you rewards cash back one percent on everything but
the best part is they have offers they can go up to 15 or 20 percent cash back based on the rewards
bonuses that they are offering so that's what kind of makes it cool why not get some extra cash for
the money you're going to spend anyway now i got to be transparent point does come with an annual
fee of about 49 but you do make that up typically with the cash back that you earn as long as you're
using the point card regularly if you use the link in the description of this video you can get 100
by signing up for point and making your first transaction with the point debit card a hundred
dollars will make up for that 49 annual fee and give you an extra 40 some dollars to use for
whatever you want and that can be helpful if you can't get a credit card maybe due to your credit
score or something like that but that brings us to number three and that is credit score
now a lot of you may click off the video hold on before you do this could cost you your job hear me
out now using your credit card like i shared in today's video with responsibility will give you
a little bit of a boost on your credit score and that's what we want we want that boost on
our credit score because lately jobs and certain jobs have been looking at people's credit scores
beyond just their work history and how their interview was they want to make sure that based
on your credit score are you trustworthy do you handle your money well and do you pay your bills
on time now this is especially true if you apply for any job where you may handle money or directly
manage money but beyond just the financial companies there's a lot of other companies that
are now looking at the credit score as a way to gauge if their new employee is worth hiring or not
now not only that if you ever do want to get a mortgage on your home you want to buy a brand
new home that's a big purchase a lot of people need to get a mortgage and having a nice credit
score as a result of using your credit wisely is a good benefit so you can get the lowest rates
on your mortgage as well as a great offer and it definitely beats the hassle of manual underwriting
if you don't have a credit score or you have a terrible credit score so give yourself a boost by
following what i shared with you in today's video and by the way if you enjoyed this video make
sure you tap the like here's another video that can help you with your personal finance here's
a video youtube thinks you're gonna like and until next time we'll see you on the next video