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[narrator] In 1958,
Fresno, California was growing fast.

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It had a pretty downtown,

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a brand-new mall,

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and sprawling suburbs.

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It was, in short,
a pretty ordinary American city,

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and the perfect site

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for one of the boldest
experiments in capitalism.

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In September of that year,

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60,000 residents received
a little rectangle of plastic in the mail,

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embossed with their names and addresses,
a mysterious number, a "good thru" date,

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and the name BankAmericard.

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Imagine opening your mail one day,
and you've never had a credit card before.

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[narrator] And you're told that
this piece of plastic is loaded with $500,

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over $4,500 in today's money.

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You could spend it however you liked,

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and so credit cards liberated
consumers to spend freely in a way

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that they never had before.

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[narrator]
They were sold as the perfect package,

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luxury and convenience,
all rolled into one.

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Pretty soon, millions of people
had a BankAmericard,

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and they loved them.

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They used their cards to buy
all the trappings of middle-class life.

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But many of them
didn't pay Bank of America back.

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In the first few years,
the bank lost around $15 million,

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and it was determined
not to let that happen again.

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Today, the industry is worth trillions,

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and there are thousands
of different credit cards

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in wallets all over the world.

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-You take Master Charge, don't you?
-Master Charge? Of course.

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[narrator] For decades,
credit cards have been marketed

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as a ticket to a more exciting life.

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[announcer]
It's everywhere you want to be,

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including front row center!

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[narrator] But for many people,

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the dream they promised
has become more of a nightmare.

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Around four in ten Americans
have credit card debt,

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and one in ten
expect that debt to outlive them.

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So, have credit cards really liberated us,

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and how can you avoid getting screwed?

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[man] Where can the self-respecting
family of today turn for aid?

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[news anchor]
Shopkeepers and customers alike

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are concerned about spiraling credit.

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[man 2] It feels like every month,

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you take one step forward
but two steps back.

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[man 3] It's difficult to calculate

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the interest you're charged
on a monthly basis,

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and of course there's
an annual interest rate, a monthly rate,

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and even a daily rate.

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[woman] What are we going to do, John?

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We must have money to meet
those overdue grocery and doctor bills.

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I don't know, dear,
but we'll find some way.

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[voice echoing] Some way… some way…

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[narrator]
Credit is a simple but radical idea.

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[video game bleeping]

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There's someone with extra money
lying around who's willing to lend it,

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and someone else
who needs extra money right now

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and would be able to pay it back later.

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Matching them up has always been
one of the biggest engines of the economy.

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[narrator 2] Those who have savings
often invest or lend them,

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hoping for a share of profit.

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[narrator] But that means
solving a central dilemma…

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risk.

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"Credit" just means "a loan,"

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but it comes from the Latin credere,
"to trust."

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Before credit cards,
if you needed to buy something big,

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you'd probably go
to your banker and ask for a loan.

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And they'd judge you on the three C's:

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your capacity to pay back the loan…

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[narrator 3]
Mr. Morton owns a hardware store in town,

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and he is well known
as a capable businessman.

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[narrator] …whether you had
enough savings to pay it back,

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or something
that could be taken if you didn't…

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What collateral can you offer
for this loan, Mr. Brown?

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[narrator] …and your character.

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[narrator 3] Since Mr. Morton is known
to the bank as a reliable man,

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the banker can feel reasonably certain

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that Mr. Morton will be able
to repay the loan when it comes due.

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[narrator] It wasn't
a very scientific way to judge risk,

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so mostly,
the people who got credit were…

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Quote, "men of responsibility."

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[narrator] Meaning white and middle-class.

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But then computers came along.

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Suddenly there were vast troves
of data available to these banks,

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to try and figure out
to whom they should lend.

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[narrator] Banks stopped judging people
based on hearsay

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and started using credit scores,

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complicated statistical models

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designed to predict
how risky it would be to lend you money.

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Some would argue it's not super fair,

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some would argue
that it's not a true projection,

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but it's what we've got
as a way for banks to, frankly,

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be able to judge you in a way
that they can judge everybody else.

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[narrator] The most used score in the US
ranges from 300 to 850.

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Above 700 means you have good credit.

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You're trustworthy.

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But if your score is below 650,
you're considered higher risk.

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So a good score puts you in the running
for some of the best types of credit.

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It also shows up when you're applying
to live somewhere as a renter.

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A landlord will want
to check your credit history

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to make sure you're good for the money.

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These numbers are not just numerals.

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It characterizes who we are as people.

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[narrator] And the easiest way
to get a credit history?

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Have a credit card.

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All this data has helped
more borrowers get credit,

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and it's helped creditors
make a lot more money off of them.

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My name is Elena Botella.

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I worked at Capital One for five years.

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Credit card companies conduct literally
tens of thousands of experiments per year

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to figure out, "How do I make
the most money from each person?"

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[narrator] Which means
that each of us is playing a game

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with slightly different rules.

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So there's really
two main groups of customers.

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So you have your transactors,
and you have your revolvers.

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[narrator] A transactor is someone
who pays their bill in full every month,

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and a revolver is someone who doesn't.

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If you look at American adults,
about 40% are revolvers.

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40% are transactors,

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and the other 20%
just don't have a credit card at all.

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Ideally, you want to be a transactor.

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When it comes to managing
your credit, boring is best.

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Pay your bills on time,

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and try not to carry a balance.

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[Elena Botella] Those people often get
a great deal on their credit cards,

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so they're getting rewards,
maybe some other perks,

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a little bit of fraud protection.

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[narrator]
All while boosting their credit score.

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Those people tend to be
happy with their cards.

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[narrator] But the credit card company
isn't your teammate.

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-[ominous bleeping]
-You're playing against them,

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which is why they're reported
to have another name for transactors.

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If you pay your debts, you're a deadbeat
from the banker's point of view.

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Called deadbeats.

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That's a deadbeat customer.

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We're not making any money on them.

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[narrator] Well, that's not entirely true.

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When you swipe your credit card,

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there is a processing fee
charged to the merchant,

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and that fee can vary,

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normally from anywhere
around a little bit less than two percent,

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sometimes up to four percent.

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[narrator] If you're a transactor,

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the credit card company
isn't making money off of you,

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-they're making money off your swipes.
-[positive bleeping]

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Just look at the Amex Black Card,
a favorite of the rich and famous.

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♪ If it ain't money
Then wrong number ♪

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♪ Black Card is my business card ♪

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♪ Pick a bag
Black Card on the way, go ♪

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♪ Give you that Black Card
No limit ♪

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[narrator] In 2014, a Chinese billionaire
bought this teacup for $36 million,

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and put it on his Black Card.

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With an average merchant fee
of three percent,

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Amex may have pocketed over
a million dollars from just that one sale.

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There is a lot
of competition in that space.

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The banks really fight
over those wealthy customers.

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[narrator]
Some have dubbed it "the Rewards War,"

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and arguably the winner is this:

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the Chase Sapphire Reserve card.

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When it debuted in 2016,
it had a sign-up bonus worth $1,500.

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It was so popular,

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Chase ran out of the metal
they used to make it.

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And within a few months…

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JPMorgan Chase's new Sapphire Reserve
credit card will reduce the bank's profit.

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Chase is losing
$200-$300 million on this card.

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The losses are due to the lavish awards
offered to entice users to take the cards.

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[narrator] But Chase didn't care.

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The card was so successful,
it cost us $200 million,

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but we expect to have a good return on it.

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-[anchor] More fake news.
-Yeah.

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-[laughing]
-I wish it was a $400 million loss.

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[narrator] Because that sign-up bonus
was a one-time hit,

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but those customers' swipes
year after year

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will send Chase more money
than the bank pays out in perks.

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But there's one type of card user
the industry actually loses money on:

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the hacker.

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I personally wouldn't identify myself
as a credit card hacker.

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I would definitely say
that I take advantage

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of all the opportunities
that are out there.

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All right, guys, ready for Texas!

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I stayed at the Bellagio
completely for free

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just because I was using credit cards.

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I've been able to take flights

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and stay at hotels
that I never thought I would before.

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The Bahamas, I was in Austin,
I was in New York, I was in LA.

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[narrator]
Brian is a credit card super user,

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someone who uses
the company's tricks against them

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to maximize rewards,
skirt fees, and never pay interest.

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Actively, I would say I have
about 13 credit cards at this moment,

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but under my whole umbrella,
I think I have about 20 to 30-plus cards.

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[narrator]
Which he keeps in specialized binders…

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This one here is my main one,
this one's my backup one.

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This one is a custom gold card.
It's actually 24-karat.

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[narrator]
…and organizes in a thorough spreadsheet.

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So I have 14 cards
logged onto my spreadsheet,

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but about six of them require
just a bit more attention.

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I have 1.5, maybe even two million points.

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When it comes to my credit cards,
I use many different ones,

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depending on what type of season it is
or what category spend I'm trying to get.

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It definitely does take a good amount
of work to stay on top of these things.

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[scanner beeping]

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[narrator] All those perks are
partly paid for by merchant fees.

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It's why sometimes
you'll see signs like this.

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American Express fees
are notoriously high,

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and it's why
a lot of places are cash-only.

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They don't want to pay the fees at all.

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And credit cards don't just
cost merchants, they cost consumers,

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because stores raise
their prices to cover those fees.

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If you have one of those fancy cards,

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you earn that back with perks,

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but if you have a more basic card,

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or pay with a debit card or cash,

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you're just paying more,

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and subsidizing
the fancy card users along the way.

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One study found that cash users are
basically giving each card-using household

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00:10:41,057 --> 00:10:43,267
over $1,000 every year.

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What you see is that it really
creates this big transfer of wealth

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from lower-income families
to higher-income families.

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[narrator] And lower-income families
are more likely to be revolvers,

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the biggest money maker
for credit card companies,

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because of a little thing called interest.

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[Elena] Say you spent $1,000 on a fridge,
so it's, like, a very round number.

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[narrator]
When your credit card bill is due,

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the fridge will cost you
exactly that amount.

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That $1,000 was
essentially a free advance,

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a loan with no interest.

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But say you can't
afford to pay off that fridge.

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The very next day, that $1,000
you didn't pay starts accruing interest.

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How much?
Well, that depends on your APR,

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your annual percentage rate.

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If you have a really good credit score,
it could be 12%,

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00:11:32,733 --> 00:11:35,444
but they go as high as 23%.

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The average is around 16%,

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and that amount
is going to compound daily.

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So every day, your balance is going to get
a little bit higher, a little bit higher.

235
00:11:47,456 --> 00:11:48,916
Then you'll get your statement.

236
00:11:48,999 --> 00:11:52,378
[narrator] This month,
you'll owe an additional $13,

237
00:11:52,461 --> 00:11:55,756
but you don't just pay interest
on the $1,000 principal,

238
00:11:55,840 --> 00:11:58,634
you pay interest on the interest.

239
00:11:58,718 --> 00:12:02,430
So every month,
your debt will grow a little faster.

240
00:12:02,513 --> 00:12:05,391
A month later, you'll owe this much.

241
00:12:05,474 --> 00:12:07,852
A year later, you'll owe this much.

242
00:12:08,436 --> 00:12:12,940
And if you keep carrying
that original $1,000 over, eventually…

243
00:12:13,023 --> 00:12:17,361
You've paid more in interest than
the actual amount you originally borrowed.

244
00:12:18,028 --> 00:12:19,363
[narrator] There's a reason

245
00:12:19,447 --> 00:12:22,575
the Old Testament
and the Koran both ban usury,

246
00:12:22,658 --> 00:12:25,411
the old-timey word for high interest.

247
00:12:25,494 --> 00:12:29,206
Dante even reserved
a special portion of Hell for usurers.

248
00:12:29,290 --> 00:12:30,791
They're in the seventh circle,

249
00:12:30,875 --> 00:12:31,959
with the murderers.

250
00:12:32,042 --> 00:12:35,045
-[distant screaming]
-Interest can be a devilish thing.

251
00:12:35,671 --> 00:12:39,175
And American card users
have been paying a lot more of it.

252
00:12:39,258 --> 00:12:42,636
In 2019, 121 billion,

253
00:12:42,720 --> 00:12:45,598
right into the pockets
of credit card companies.

254
00:12:46,807 --> 00:12:51,228
Credit card companies don't want people
who pay back all their money every month,

255
00:12:51,312 --> 00:12:54,648
and they don't want people
to never pay back their money,

256
00:12:54,732 --> 00:12:58,194
but between those two extremes
is the sweet spot,

257
00:12:58,277 --> 00:13:02,823
is the place where banks make
a lot of money on those loans.

258
00:13:02,907 --> 00:13:05,743
[narrator] And they've got quite
a few tricks to make sure that happens.

259
00:13:06,410 --> 00:13:09,705
First, they need you to pick their card.

260
00:13:09,789 --> 00:13:14,251
Dropping ready-to-use cards on
unsuspecting consumers is now illegal,

261
00:13:14,335 --> 00:13:18,589
but companies send out billions
of credit card offers every year instead,

262
00:13:18,672 --> 00:13:22,384
with enticing deals catered to
the kind of customer they think you are.

263
00:13:23,469 --> 00:13:26,889
Transactors will get offers
for those great perk cards.

264
00:13:26,972 --> 00:13:29,475
But if they think
you're more likely to be a revolver,

265
00:13:29,558 --> 00:13:31,769
they'll send you something like this:

266
00:13:31,852 --> 00:13:35,147
a sweet introductory offer,
no interest for the first year.

267
00:13:35,231 --> 00:13:38,901
Now, what happens from the consumer
psychological standpoint of this, is that

268
00:13:38,984 --> 00:13:42,404
when I see these rewards offered to me,

269
00:13:42,488 --> 00:13:46,033
I start now thinking about free benefits.

270
00:13:46,116 --> 00:13:48,577
[overlapping] Bahamas, I was in Austin…
Completely for free.

271
00:13:48,661 --> 00:13:50,162
Even two million points.

272
00:13:50,246 --> 00:13:52,289
I start thinking about
the things I could get,

273
00:13:52,373 --> 00:13:57,044
and I stop thinking about the things
I have to pay to get those benefits.

274
00:13:57,127 --> 00:14:01,006
[narrator] Like the amount of money
you have to spend to get those rewards,

275
00:14:01,590 --> 00:14:04,218
or the high interest rate
that'll kick in later.

276
00:14:04,718 --> 00:14:06,387
And the credit line they give you?

277
00:14:06,470 --> 00:14:09,014
That isn't because they think
you're good for that money.

278
00:14:09,098 --> 00:14:11,809
When consumers see
some information in front of them,

279
00:14:11,892 --> 00:14:13,936
they assume there's
a reason it was put there,

280
00:14:14,019 --> 00:14:16,856
and the assumption might be
that whoever is making this decision

281
00:14:16,939 --> 00:14:22,152
thinks that I'm credit-worthy enough
that I can have a limit that's this high.

282
00:14:22,236 --> 00:14:24,989
The business model
that credit card companies use

283
00:14:25,072 --> 00:14:27,366
with the customers
with lower credit scores

284
00:14:27,449 --> 00:14:29,201
is sometimes called "low and grow."

285
00:14:29,285 --> 00:14:31,328
[narrator]
Starting you on a low credit line

286
00:14:31,412 --> 00:14:33,372
and then slowly increasing it,

287
00:14:33,455 --> 00:14:36,041
because studies show,
most people will use that room

288
00:14:36,584 --> 00:14:38,794
almost perfectly in tandem.

289
00:14:38,878 --> 00:14:42,840
On average, if you double
the credit line, you double the debt.

290
00:14:42,923 --> 00:14:46,176
So sometimes consumers are myopic,
and what I mean by that is that

291
00:14:46,260 --> 00:14:47,761
they have almost tunnel vision.

292
00:14:47,845 --> 00:14:50,347
They're focused on today,
on the here and now.

293
00:14:50,431 --> 00:14:53,642
[narrator] And it's especially easy
to overspend with a credit card.

294
00:14:53,726 --> 00:14:56,353
So there's research on
what's called "the pain of paying."

295
00:14:56,437 --> 00:14:58,063
What it suggests is that

296
00:14:58,147 --> 00:14:59,815
different forms of payment

297
00:14:59,899 --> 00:15:03,819
can be more or less
psychologically painful to make.

298
00:15:03,903 --> 00:15:08,198
[narrator] One study found that areas
of the brain associated with pain and fear

299
00:15:08,282 --> 00:15:11,660
are more likely to light up
when you watch someone pay with cash

300
00:15:11,744 --> 00:15:14,204
than when you watch them
pay with a credit card.

301
00:15:14,288 --> 00:15:17,207
And once you've racked up
a month's worth of charges,

302
00:15:17,291 --> 00:15:18,834
you get your first bill.

303
00:15:18,918 --> 00:15:21,629
It will probably look something like this.

304
00:15:21,712 --> 00:15:23,923
In the top right corner
will be your due date,

305
00:15:24,006 --> 00:15:26,133
balance, and a minimum payment.

306
00:15:26,216 --> 00:15:31,472
It's usually 3% of your total debt,
or $25, whichever is higher.

307
00:15:31,555 --> 00:15:34,642
That's there for a good reason,
so you know how much you have to pay

308
00:15:34,725 --> 00:15:37,019
so you don't default on your credit card.

309
00:15:37,102 --> 00:15:39,146
But it may have the impact

310
00:15:39,229 --> 00:15:42,775
of anchoring consumers to pay
less than they would have otherwise,

311
00:15:42,858 --> 00:15:45,027
because they get
too hooked on that one amount

312
00:15:45,110 --> 00:15:46,737
they see on the statement itself.

313
00:15:46,820 --> 00:15:49,907
[narrator] It's known as anchoring bias,

314
00:15:49,990 --> 00:15:51,492
a tendency our brains have

315
00:15:51,575 --> 00:15:54,870
to favor the first piece
of information we're offered.

316
00:15:54,954 --> 00:15:58,207
When a ship wants to dock,
it drops an anchor in the water,

317
00:15:58,290 --> 00:15:59,625
and that holds the ship down.

318
00:15:59,708 --> 00:16:01,627
Of course
the ship can move back and forth,

319
00:16:01,710 --> 00:16:03,879
but it doesn't stray
that far from the anchor.

320
00:16:03,963 --> 00:16:06,674
[narrator] Which is roughly the same thing
that happens in our brains

321
00:16:06,757 --> 00:16:08,717
when we see a minimum payment.

322
00:16:08,801 --> 00:16:11,679
[Hal Hershfield] We sort of stay
close by to that number.

323
00:16:11,762 --> 00:16:14,640
[narrator] If you just paid the minimum
on that fridge from before,

324
00:16:14,723 --> 00:16:16,517
you would eventually pay it off,

325
00:16:16,600 --> 00:16:19,937
but it would take almost five years,

326
00:16:20,020 --> 00:16:22,523
and cost you an extra $400.

327
00:16:22,606 --> 00:16:27,403
They call it "the treadmill to nowhere."
You're on that minimum-balance ride,

328
00:16:27,486 --> 00:16:32,241
which only takes off a minuscule amount
of your balance every pay period.

329
00:16:32,825 --> 00:16:35,703
[narrator] US law now requires bills
to have one of these,

330
00:16:35,786 --> 00:16:40,457
a little box that tells you how much money
you might save by paying more each month.

331
00:16:40,541 --> 00:16:43,293
[Hal] Now, note what's interesting
about this is that

332
00:16:43,377 --> 00:16:46,755
nobody is actually being encouraged
right there on that statement

333
00:16:46,839 --> 00:16:49,049
to pay the maximum
of what they can, and in fact,

334
00:16:49,133 --> 00:16:53,053
research that I and others have done
has found that people still end up

335
00:16:53,137 --> 00:16:55,973
anchoring on whatever
that extra information is.

336
00:16:56,056 --> 00:16:58,142
They may end up paying
more than the minimum,

337
00:16:58,225 --> 00:17:00,519
but they still might pay
less than they would pay

338
00:17:00,602 --> 00:17:02,938
if none of that information
was there to begin with.

339
00:17:03,022 --> 00:17:05,149
[narrator] And there are
lots of other little obstacles

340
00:17:05,232 --> 00:17:07,568
credit card companies throw in our way,

341
00:17:07,651 --> 00:17:11,030
like long,
complicated contracts full of fine print,

342
00:17:11,113 --> 00:17:13,532
where they hide all sorts of penalty fees:

343
00:17:13,615 --> 00:17:15,034
for paying a bill late,

344
00:17:15,117 --> 00:17:17,286
transferring your balance
to a different card,

345
00:17:17,369 --> 00:17:19,830
or using your card at an ATM.

346
00:17:20,372 --> 00:17:23,417
It's no accident
so many of us are struggling with debt.

347
00:17:24,043 --> 00:17:27,671
And for a lot of people,
it's not even about the game being rigged.

348
00:17:28,255 --> 00:17:30,049
It's the whole arcade.

349
00:17:31,175 --> 00:17:34,887
Working at the credit card industry,
I had a really good perspective of

350
00:17:34,970 --> 00:17:36,472
how it worked from the inside,

351
00:17:36,555 --> 00:17:41,643
but I didn't feel like I understood really
why consumers chose to borrow money,

352
00:17:41,727 --> 00:17:45,355
and ultimately
I was really craving to understand,

353
00:17:45,439 --> 00:17:47,983
were credit cards
making people's lives better or not?

354
00:17:48,067 --> 00:17:49,318
[narrator] In pop culture,

355
00:17:49,401 --> 00:17:51,445
-they're associated with luxury…
-[woman] Rosa!

356
00:17:51,528 --> 00:17:53,280
-…freedom…
-He gave me his credit card.

357
00:17:53,363 --> 00:17:55,449
-…and frivolous spending.
-Becks!

358
00:17:56,116 --> 00:17:58,577
Two hundred dollars
on Marc Jacobs underwear?

359
00:17:58,660 --> 00:18:01,622
Oh, underwear is a basic human right.

360
00:18:01,705 --> 00:18:04,458
[narrator]
But the reality is often the opposite.

361
00:18:04,541 --> 00:18:06,919
I think most of the people I talked to,

362
00:18:07,002 --> 00:18:10,130
they didn't feel they'd used
their credit card for extravagant things.

363
00:18:10,214 --> 00:18:16,804
People were using it for things that were,
kind of, like, simple, everyday expenses.

364
00:18:16,887 --> 00:18:20,808
[narrator] That may be why
credit card debt carries a special stigma.

365
00:18:20,891 --> 00:18:24,394
One study found that people
accurately reported their mortgages,

366
00:18:24,478 --> 00:18:29,358
but claimed their credit card debt
was 40% less than it actually was.

367
00:18:29,441 --> 00:18:34,196
Most people pay back their debts
most of the time until they have a crisis.

368
00:18:34,279 --> 00:18:37,324
And so suddenly
you're out of a job or you get sick,

369
00:18:37,407 --> 00:18:40,119
and you turn to your credit card
to make up that difference.

370
00:18:40,202 --> 00:18:43,247
It's no secret
that few of us have savings accounts,

371
00:18:43,330 --> 00:18:46,375
we couldn't come up with a few
hundred dollars in a pinch if we had to.

372
00:18:46,458 --> 00:18:48,460
[narrator] It's $400.

373
00:18:48,544 --> 00:18:54,258
Thirty percent of Americans
can't cover a $400 emergency expense.

374
00:18:54,341 --> 00:18:58,804
And so our next best thing is credit.

375
00:18:58,887 --> 00:19:01,723
A lot of us use credit cards
as savings accounts,

376
00:19:01,807 --> 00:19:05,144
as the "break open in an emergency."

377
00:19:05,227 --> 00:19:09,565
And that's a very expensive way
to pay for your problems.

378
00:19:09,648 --> 00:19:13,318
And this is the real difference
between the American system

379
00:19:13,402 --> 00:19:16,280
and that of any other
industrialized country,

380
00:19:16,363 --> 00:19:20,200
that when people are in crisis,
we ask them to fend for themselves,

381
00:19:20,284 --> 00:19:22,786
and to do it on their plastic.

382
00:19:22,870 --> 00:19:25,205
[narrator]
During the 2009 financial crisis,

383
00:19:25,956 --> 00:19:30,252
the US passed a law that banned
many of the industry's worst practices.

384
00:19:30,335 --> 00:19:32,588
We also put a stop
to retroactive rate hikes

385
00:19:32,671 --> 00:19:35,215
that appear on a bill suddenly
with no rhyme or reason.

386
00:19:35,716 --> 00:19:39,970
[narrator] That act did drastically reduce
the amount of certain fees we had to pay:

387
00:19:40,053 --> 00:19:44,683
by one estimate,
saving Americans $12.6 billion per year.

388
00:19:45,517 --> 00:19:51,356
But I think what you've seen
every year since that law has passed is,

389
00:19:51,440 --> 00:19:54,193
the CARD Act really moved
credit card companies

390
00:19:54,276 --> 00:19:57,070
from a model
that was actually more fee-driven

391
00:19:57,154 --> 00:20:00,324
to a model that was more interest-driven.

392
00:20:04,578 --> 00:20:10,000
[Farnoosh Torabi] Absolutely, there is
a fantastical message around credit cards…

393
00:20:10,083 --> 00:20:11,418
That'll be a charge.

394
00:20:11,501 --> 00:20:15,172
…that it's going to be this tool
to get you to a better place in life,

395
00:20:15,255 --> 00:20:19,134
to build your dreams,
to get you to a better future.

396
00:20:19,218 --> 00:20:21,762
It's not wrong, but….

397
00:20:21,845 --> 00:20:25,390
it does require
following some important rules.

398
00:20:25,474 --> 00:20:27,976
[narrator] Don't let the card pick you.

399
00:20:28,060 --> 00:20:30,354
Find the one that's best for your needs,

400
00:20:30,437 --> 00:20:32,356
with the lowest interest rate you can get.

401
00:20:32,439 --> 00:20:33,982
Start with the simple things.

402
00:20:34,066 --> 00:20:36,151
Know when
your credit card statements are due.

403
00:20:36,235 --> 00:20:37,736
Know what your credit score is.

404
00:20:37,819 --> 00:20:40,322
Focus on those small things,
and you'll find yourself

405
00:20:40,405 --> 00:20:44,368
actually able to reap a lot more benefits
than you ever would have imagined.

406
00:20:44,451 --> 00:20:47,454
[narrator]
Then, use your card like it's cash.

407
00:20:47,537 --> 00:20:51,166
You may have heard that revolving
can sometimes boost your credit score.

408
00:20:51,750 --> 00:20:55,087
This is one of the biggest myths,
I don't know who has started this myth.

409
00:20:55,170 --> 00:20:56,838
Let's just set the record straight.

410
00:20:56,922 --> 00:21:01,385
It is always best to pay off
your balance in full every month, period.

411
00:21:01,468 --> 00:21:03,762
I use my cards
pretty much like a debit card.

412
00:21:03,845 --> 00:21:05,639
I will never carry a balance on it,

413
00:21:05,722 --> 00:21:08,141
even if it has a 0% APR promotion.

414
00:21:08,225 --> 00:21:10,352
[narrator]
But if you find yourself in debt,

415
00:21:10,435 --> 00:21:13,355
there are things you can do
to help climb your way out.

416
00:21:13,438 --> 00:21:16,316
Start by taking it one level at a time.

417
00:21:16,400 --> 00:21:19,987
We have a hard time dealing with
and thinking about bigger numbers.

418
00:21:20,070 --> 00:21:24,032
We have an easier time thinking
about smaller chunks of something.

419
00:21:24,116 --> 00:21:26,076
If you've got $10,000 worth of debt,

420
00:21:26,159 --> 00:21:28,453
and you wanna be
out of debt in the next two years,

421
00:21:28,537 --> 00:21:30,747
that's $5,000 a year.

422
00:21:30,831 --> 00:21:32,666
What is that on a monthly basis?

423
00:21:32,749 --> 00:21:35,002
What is that on a weekly and daily basis?

424
00:21:35,085 --> 00:21:37,629
[narrator] Then automate your payments.

425
00:21:37,713 --> 00:21:41,925
Use and leverage tools
that make life easy and make life certain.

426
00:21:42,009 --> 00:21:43,885
If we can automate it and say,

427
00:21:43,969 --> 00:21:47,055
"Okay, every month, this much
comes out of my checking account,

428
00:21:47,139 --> 00:21:49,224
then all I have to do
is make one decision."

429
00:21:49,308 --> 00:21:52,227
[narrator]
A credit card is a powerful tool.

430
00:21:53,312 --> 00:21:56,106
And in the moments of life
when you're down on your luck,

431
00:21:56,189 --> 00:21:57,649
it can keep you afloat.

432
00:21:58,317 --> 00:22:01,153
-But it's also easy to slip up…
-[ominous bleeping]

433
00:22:01,236 --> 00:22:03,572
…and that's not a personal failure.

434
00:22:04,239 --> 00:22:06,450
It's how the whole game was designed.

435
00:22:08,160 --> 00:22:11,330
[theme music plays]