today i'm comparing the difference between a debit card and a credit card and what banks don't want
you to know like for example when used correctly you can travel for free or you can get cash back
for christmas like i did with over 500 i'm about to cash out this december and here's the real key
i never carry a balance on my credit cards or pay any interest payments ever and in this video
i'm going to share with you how you can do this too and what banks don't really want you to know
about now i have a video on this exact topic that i did a year ago but the problem with a
year ago is i was new to youtube still figuring things out and let's be honest that video kind
of stinks so i want to make this one hopefully a little bit better you ready to get started
let's go first we're going to talk about the difference between debit and credit then i'm
going to go over the tool that i use to make sure that i'm always paying off my credit card in full
every month and how i got over 500 in cash back rewards and i'm also going to share with you an
alternative maybe you can't apply or get approved for a credit card well what do you do don't worry
we're going to discuss it all now let's start with the difference between debit and credit first a
debit card anytime you swipe that debit card it pulls money out of your bank account that it's
linked to so let's say you have a hundred dollars in your bank account that debit card will allow
you to buy anything up to a hundred dollars and then likely it will decline because it's directly
linked to that checking account a credit card is based on a credit line now some credit lines can
be quite high anywhere from 10 to 15 to 20 000 or more but it's not money that you actually own
you're borrowing money on that credit card and that can be a little bit sticky i actually don't
ever recommend borrowing money or going into debt because what happens is the average interest rate
on a credit card is about 14 and who wants to pay 14 every year to carry a balance on a credit card
ah another key difference is a debit card will not build you a credit score whereas a credit
card will so let's say down the road you want to buy a house you want to get a mortgage you want
to get a car loan credit cards will help you build up that credit score so you can have some credit
worthiness to apply for that new home and what about fraud you know some scumbag decides he wants
to steal your credit card or your debit card they live in their mother's basement and they're going
to try to get as much money from you as possible well if they steal your debit card or your credit
card both of them do come with a little bit of fraud protection but there's a big difference with
a debit card typically what will happen is that you have to wait for the fraud claim to be cleared
to get your money back this actually happened to me a couple years ago when i was only using
a debit card somebody got a hold of my number they spent well over a hundred dollars on various
different purchases by the time i called the bank they were already long gone so the problem with
that was i had to then wait for the bank to do the research find the claim and figure it out i had to
wait about two weeks to get my 100 back and during that entire time i was out 100 and just imagine if
you get flooded for more than that you're out of that money that's out of your bank account
it's gone until they figure it out and redeposit with a credit card typically they will give you
a provisional credit if any type of fraudulent activity happens with the provisional credit
you don't have to worry about your money going away you just simply move on until they figure
out where the fraudster is they get them they lock him in prison and they beat him to death or rather
they just resolve the claim and give you your money back but why do i actually use my credit
card like a debit card because of the cash back rewards and you know i always come with receipts
on this channel i will never recommend something that i don't personally do or use and right here's
a good example here we are in my american express account you can see reward dollar balance of 525
dollars and 50 cents now what i do throughout the entire year we build this balance up
and then we use it for christmas gifts at the end of the year now remember you can also use this for
travel let's say you like going on cruises or you want to build up a bunch of airplane miles that's
perfectly fine too ride the wave have some fun with it and that's just another alternative but
what i personally like doing right now is using it for cash back rewards doesn't really matter what
credit card you get in this case the reason i have this american express card is because it gives me
up to six percent cash back on groceries three percent on streaming and three percent on gas
we're a family of four we travel in the car a lot we spend a lot of money on groceries and this six
percent cash back is pretty darn cool so as you can see it has really helped us rack up quite a
bit of the amount of money in this period of time so how did i get this and how can you
do this too well this is what the banks don't want you to know now the banks what they want
what these credit card companies want is they want you to just say hey i have this big large balance
i'm just gonna use it and i'll figure it out later and then all of a sudden you carry a balance and
they get to charge you 14 interest and make a lot of money off of you but there are three important
notes number one this does take a little bit of responsibility so you need to make sure you have
a monthly budget and that you stick with that monthly budget you can only buy the things that
you need credit cards are designed so you spend more than you should but the goal is you have a
budget so you know exactly what you need to spend and you don't care about how large your credit
limit is number two if you live in an area that charges you a convenience fee for using a credit
card this isn't the way to go because who wants to spend extra money anyway that's that's kind
of what we don't want we want to get cash back rewards we don't want to be spending cash back
on convenience number three don't fall for this typical quote well why do all this on this video
this is easy you just pay off your credit card in full every month those are famous last words
don't fall for that trap a lot of people will say well i'll just pay a lot of stuff i'll leave all
that money in my checking account i'll use my credit cards and i'll just pay off at the end
of the month i'm not going to need to track it on a budget or a spreadsheet or anything like
that i'll just pay it off but the problem with that is is that is the credit cards game they
they want you to trip up sometime they want you to think i think i still have 100 let me buy this
you swipe the card and then all of a sudden oh crap i didn't have the 100 which means they're
going to carry that 100 balance over to the next month guess what they get their 14 so
here's exactly how i got this 525 and 50 cents i have a transaction register and i built this
in microsoft excel it's nothing fancy this is just how it works over here on the far column column g
this is a balance and it automatically updates every time i make money or spend money this
balance automatically updates now what i use over here in column a is a few descriptions
t stands for transfer anytime i want to transfer money into my savings account or something like
that ap stands for automatic payment in this example level on does charge a convenience fee if
i use my credit card so i'm not going to do that instead i did an automatic payment directly out
of my checking account here we have d that means deposit i got money from my job that's great 200
there we go and then the last one is amex american express this is my credit card this is me treating
my credit card it doesn't matter whether you use an amex card or amazon rewards prime card chase
it doesn't really matter you choose whatever credit card works best for you and what the
rewards are that you're seeking whether that's travel or cash back as the month goes on and i
swipe that credit card i immediately come in here and i update it on my transaction register now
my budget every month is about 900 for grocery remember we're a family of four we're gonna
spend a little bit more on groceries but here's the balance right now i know i have 157 dollars
as you can see it kind of bleeds down there in my checking account but let's take a look and
see if i have any new amex charges because we in fact just went to publix to buy some groceries ah
indeed right there it is we have a november 20th pending payment to publix for 69.22 so what i'll
do is i'm going to come over here i'm going to say amex simply type that in amex on 11 20 for publix
and just to verify that is 69 22 hop back over here type in 69 22 under the payment i'm going
to hit enter and as you can see it automatically updates i now have 88 dollars and 13 cents left
on my checking account until i get paid next okay that's fine if we hop back over here we can then
see i have a 1709 for november 9th in publix but look it's right up here there's that 1709
so it looks like we're all clear and everything's good now remember that is the budget we have nine
hundred dollars when we get paid a little bit more here but at the end of the month i can't spend
more than nine hundred dollars in publix that's my supermarket that's my grocery store that's
what we're gonna spend that's it now because i spent 69.22 i'm gonna get six percent cash back on
that amount at the end of the month with american express but i'm always focused right here i'm not
focused on my bank account because remember it's not actually out of my bank account right now
in my bank account it's going to show most likely right now it's going to show 226.15 because all
of these amex charges have not actually been paid out of my bank account yet i'm just doing
it this way so i can keep track and actually look at how much money i have left to spend
and that's the real key of the responsibility you've got to keep an eye on this and say okay
i only have 88 dollars and 13 cents left in my transaction register if i hop over and i look
at my bank account and i think i have 226 i'm in for real trouble because i might spend more than
i need to at the end of the month what i'm going to do is i'm going to look at my american express
statement or whatever your credit card statement is you just look at your credit card statement
and then we're going to go through and we're going to use this column right here column e and we're
going to verify every single payment that we made is it matching up was it 40 and 40 cents if so
i'll put a y and that indicates yes and then i'm gonna come down here oh got the publix we got the
paramount plus going on and we got the other publix and then once that's all verified and good
i will then go and pay off my credit card in full and guess what i don't have to worry about
it i don't have to worry about if i had the money because i already tracked it here now you might
be asking can i get the excel document well the last time on the last video i gave you access to
it and it crashed my website every time because people keep clicking on it and i'm sorry i can't
keep up with that so stay tuned i will have that available in the near future but now what
about an alternative let's say you're like well wait a minute i have a problem i can't actually
get a credit card because i either live in an area that charges ridiculous convenience fees or
i don't have the credit worthiness to actually get a credit card i'm going to get declined it's
going to suck is there another option well yes there is and i actually use this as well
it's called the point debit card and the cool thing about the point debit card
is that it acts just like a credit card and gives you rewards anywhere from one percent to
20 percent cash back dependent on the merchant i personally have been using this card for fun money
outside of what i've showed you and have been using it for the last seven months
now this is an app that allows you to transfer money from your bank account
into the point app let me show you exactly how it works so every time i swipe my point debit card
you can see my current balance in the point app is 636.55 and you can see my recent transactions got
a little bit of starbucks going on panda express things like that what i use this for is truly
call it my flexible spending account where i can just go out have a little bit of an allowance of
just enjoying myself and doing whatever i want but i'm also getting some cash back rewards
and if i ever draw too much down let's say i go out to target right now i swipe the point debit
card and it's for 700 well my balance is only 636 it'll actually decline the transaction and that's
what's nice about this point debit card is it kind of keeps you in balance with what you have going
on but then if i hop over right down here to my rewards you can see i got starbucks seven points
i got 24 on sun creek and look there are different times that they give you bonus points so anytime
i swipe at a coffee shop you get five percent cash back now everything's one percent but there
are accelerators that can go up to 20 cashback i think i've even seen 30 at one point but right now
they're running a deal on copy shops then what i can do is i can cash out these points every dollar
equals a point for cash back and what they do is they take those points they put it back into your
point account now you have free money to play with let's hop over here i'll show you exactly how this
actually works look right now you can get fifteen percent cash back on any purchases with nike
you can get five percent with go puff you can get ten percent cash back with clear
you can get five percent on whole foods you see you can just and they change this
every single month five percent cash back on amazon now if you're gonna swipe it into place
that is not something that already gives you cash back you're automatically gonna get one percent no
matter what now the point card does come with an annual fee but with up to twenty percent on select
merchants and one percent everywhere else as long as you use this it well outweighs that annual fee
but to make it even cooler if you're interested in getting the point debit card for a limited
time anyone who uses my affiliate link in the description below will get a 100 statement credit
for the very first transaction that you make with the point card it's a great way to get started
and avoid at least your first year's annual fee that's the key stay on a debt avoid those interest
charges and do what the bank doesn't want you to do use a credit card like a debit card or take a
debit card and use those cashback rewards if you enjoyed the video share it so other people can
take advantage and check out this video next and until next time we'll see you on the next video