Welcome together, we're gonna explore our personal finances and figure out how to improve them. Whether you're just getting started in life on your finances, or you may already have a home and a car payment and you're struggling to get credit cards under control, are you getting a later start in life on saving for retirement, Reducedebtincreasewealth.com is a podcast to educate those to improve personal finances, whether it's eliminating debt, or making smart investments. Hello, Mr. Chuck here, and I'm going to be talking about credit cards in which his credit card make good deal and what to look out for when applying for credit cards. But I'm going to start out with the retail credit card that everybody searches online for that's why the name of this episode is Best Buy credit card gets over a million searches a month so I thought well maybe we should look into what Best Buy credit card is all about. So I found a article, wallet hub.com that rates credit cards inherently our review Best Buy credit card, it's an accepted credit scores is excellent. good credit. So if you get average credit or worse don't even apply for this because you'll be rejected or they'll give you a credit card which will have an annual fee and high rates of interest. So we don't want that. The Best Buy credit card I'm going to read this article parts of it because it's important that I get it correct. The Best Buy credit card would be a solid addition to your wallet. If you pay your bill in full every month and regularly shop it best buy the most notable feature is the ability to earn 5% back on Best Buy purchases to Spence in the form of Best Buy gift certificates. its biggest flaw is the deferred interest Clause and its financing plans, and you have to choose between rewards and promotional financing at the outset, if you'd like to get the 5% cashback, they're going to give you a gift certificate, which means you have to go back to Best Buy to use it. Unless you get a lot of stuff for Best Buy and you're continually buying stuff at Best Buy. I don't really like that feature, and is 5% back better than the first interest? Well, I looked at the rate and the rate on this credit card is 25.24%. If you make it thousand dollar purchase. That's roughly This is an estimate $102 a month and entrust the which is every month as long as your balance is up there. If you get the 5% cashback on $5,000 that's $250. So two and a half months, and you're gonna be paying more interest than what your cashback was. I don't like that feature. What are they talking about the deferred interest clause. You can get either or but not both. You can get the 5% back or you can get the first entrust the first entrance I went in, looked at the details of this card, and it basically saying depending on the promotion, you can have zero interest for six months. 12 months, 18 months, 24 months or 36 months. depending on the particular promotion, but in the details I notice, well my that may sound good and six months at 5000. That's going to save you. It says an estimate around $600 which is way more than the 5% back that the where I'm reading this and the details of the credit card issued by the bank. If the balance is not paid in full by the end of the promotional period, interest charge will be imposed on the purchase date at the purchase rate on your account, which is 25 point 24%. The APR is Of March 19 2020. And we're vary with the market based on the prime rate. These offers are not available all the time and may be limited to specific margin ties and or have a minimum payment and purchase requirements as disclosed in the offer. If your card agreements and returns of the offer and the applicable laws governing the transaction, including increasing aprs, and fees and termination of the form of a promotional period. So what they're saying is, say you buy something on March of 2020, your interest rates gonna be 25.24% less and you got something big, so it's 36 months, it's just go, you know, three years from now, three years from now, if you still have an unpaid balance on those items, they're gonna go back to march of 2020. And apply 25 point 24% interest every month on your unpaid balance. If the interest rate goes up, because the prime goes up and down, you could be paying more than that or if it goes down there Little bit slower on reducing it but it could go down a little bit they're gonna go back to day one data purchase and charge you roughly 100 some dollars a month interest on you know you're making monthly payments so it'd be declining balance so work his way down over the three years plus whatever your unpaid balance is going forward from the three years there so that's not really such a good deal is it? I don't think so. And I found this information and you see at BestBuy website, on their credit card agreements and if you look really hard, you'll find a little thing you can click on called terms and conditions of offer and that's where I found it. real big they got 3% back and rewards and gas 2% back and awards on dining and grocery 1% on everyday purchases. That's real big and right on are there it says apply now. And then it says View pricing and terms and that's where you click on to get your terms and conditions. At there, everything is big on all the deals 18 month financing on storewide purchase trial months financing on storewide purchase totaling 299. You know, the more you spend the longer you get the where and that's the best buy credit card and we're going to go down here a little bit more. Back to nerd wallet. You need good credit to get the visa. There are three different Best Buy credit cards and the one you get approved for depends on your overall credit worthiness. The people with good credit and or better generally get the Platinum Best Buy Visa card which has no annual fees allows you to make non Best Buy purchases and reward you with up to 3% back for a limited time in the process. applicants who don't get approved For this standard, Best Buy visa as considered for the Best Buy store card, and best buy gold visa in that order, you can check your latest credit card score for free on waterhog to see what you're most likely be approved for. No annual fee unless you get gold if you get gold it's $59 a year this is in wallet hub 5% back on Best Buy purchases the best feature get approved for either Best Buy visa Platinum or Best Buy visa gold, you earn 2% back on purchases made at restaurants or bars. You also get 3% back on net purchases made at gas stations plus 1% back on all other non BestBuy purchases. But for the real star of the show all for Best Buy rewards cards is the 5% back your earned on pre tax amount of all best By purchases, if you regularly buy things from Best Buy, you're planning a large purchase from the retail 5% off is everything you will say you add a lot of money and I don't think so $5,000 250 bucks, it's not a whole lot, you're going to pay way more than an interest at 25% because you got to get either or so if you take the five 5% rewards, you're gonna get $250 that's a gift certificate, and you have to go back to Best Buy to use it. Then you're gonna pay interest on 25.24% which is around $102 a month on $5,000. So the first month you're gonna pay 102 the second month you're gonna pay 100 the third month you're gonna pay 99 depending on how much you got to pay. If you have the money to pay it all off within the 25 days, they do give you a 25 day grace period. So if you can pay it off within that 20 Five days you pay no interest, then the 5% is a good deal. If you can't afford to pay it off, then it's not a good deal. deferred interest makes financing debt dangerous if you're planning a big ticket, Best Buy purchase, you won't be able to repay completely within a single billing period, you're better off getting a zero percent credit card that's not affiliated with the retailer. Unlike other retailers Best Buys use a feature called deferred interest which allows interest to react retro actively apply to the entire original purchase. If you pay your bills late or don't repay your full balance by the end of the low rate introductory period. All for Best Buy cards have it so if you make a late payment, it can go back apply interest from day one and charge you enters. So if you One day late on making a payment, you're going to pay interest from day one. And that's on a deferred interest. That beware user beware on that. I've been thinking, well that's what Best Buy does with how about these other retail credit cards. So I'm going to do some research on that and I'll be back with that. Okay, I found another article and wallet hub.com that gives you a list of best store credit cards. A credit a store credit card is a credit card it works only at one retailer or a group of related retailers. store credit cards are great for saving money on purchases at your favorite retailers or building credit at a low cost. They are known for offering generous first purchase discounts and lucrative ongoing rewards without charging annual fees, and nearly all credit store credit cards require just fair credit for approval. Before below, you can compare cards from 100 plus the country's largest and most popular retailers. You can also check out wall wall hubs editor's picks for the year's best credit, best store credit cards, some of which may be from wall harbor partners. If you'd like a recommendation, they are selected for their standout rewards rates and fees and popular store credit card categories. And I got Walmart JC Penney, target red, Amazon Express finger hut, Lowe's Shell Gas Station, on and on and on. If you scroll down a Scott mugham reward credit account. If you click on the highlight at wording there Yeah, they'll take you to the details of that particular card. So they rains and it tells you what kind of a credit score Do you need good or bad, fair, excellent whatever and tells you the interest rate and tells you the points that might reward points you might get any discounts you might get in the store and all the benefits of that particular card. Just don't get a whole lot of them. You got to be careful. Maybe just get one. Try to find one or the store, you go to the most, say Walmart and try to get a Walmart card and then only use it at Walmart. A lot of them that you can only use them at that one particular store or group of stores. Don't let the balance get out of control. Keep mom paying it and most all these years Not allowed to transfer a balance from another card into this card. But what the ones I checked out had a pretty high percent rate of interest 25 and a quarter 24%. And that rate of interest is going to vary depending on your credit score, the better credit score you got, the better rate you can get better rewards program they have. So that's all I have on credit cards. The second part of this, I'm gonna talk about credit card data or the average credit card debt in 2020. Okay, I got an article here, and I'm not gonna read it value penguin.com and they're talking about the average credit card debt in America as of July 2020. I'm not going to read I'm going to scroll down and the average American household debt is 50 $700 average for balanced carrying household is $9,333. So the average is 5700. And that's if you pay it off every month. But if you're carrying a balance, meaning you got outstanding balance from month to month, it's gonna be over $9,000 and then it gives you know us consumer debt 3.9 trillion revolving debt 1.03 to it a lot of money. 41.2% of all households carry some sort of credit card debt. So if you're thinking you're the only one with two or three credit cards with a outstanding balance, you're almost the majority 41% that's not quite the majority is getting close. The Northeast and West Coast hold the highest average credit card balance both averaging over $8,000 so they have this broken down by average credit card debt in America they got by year they have it by region they. So it's pretty important depending on where you live if you live in the area such as New York City, LA, or even Alaska where you got a higher cost of living you're gonna have higher debt. Alaska is number one was $13,048 in debt. Alabama's number 29 7000 debt California is number four with 10,400. And I live in Ohio and it's that's not too bad. It's number 51. I don't know how the 50 states How can we write it 51 $5,446 in debt in Ohio. Were in good shape. I guess sir. Got the district of columbia hidden in error, they go on down. And they have all this information by gender, whole nine yards if you are interested in that you're not the only one at almost getting their words to majority of people. So you definitely have a lot of people out there it could be benefit from listening to reduce that increase. Well, our main focus at the start was paying off credit card debt. And that's the reason 41% almost 42% of US households are carrying a balance of at least $5,000 or more $9,000 if you and that's a lot Somalia's to 3000 or more than that 10 20,000. That's my point. You know, it. You got to get your finances under control. And I'm going to end this podcast this episode and talking about how to reduce your debt. That's what the podcast is about. You need to have a debt reduction plan. First thing you do is you need a budget. You need were your money coming from and where it's going to. And if you were really smart, you'll take those categories, figure it out and do it a percent of your income. How much of your income is your credit card debt? We know 42% all most of the households are carrying a balance that how much of their income is that credit card eating up, and I would base that on what you've been paying in the past and what your minimum balance payment is. How much of your income is eaten up? By the minimum payment on all the credit cards you owe, that would figure that out. If it's more than 10 20% you're in trouble because your budget 50 3020 20% of the income should be towards savings and paying off your credit card debt. If you're if you got 19% and credit card debt, that's only 1% going to savings, you're gonna have a hard time getting out from under that because on your debt reduction plan you got you got three accounts your checking your savings and retirement, hopefully retirement account through work. If not, you should have an IRA set up. Your savings account is for your emergency fund. build up your emergency fund so you reduce your debt down to the minimum payment. Quit increase in your debt. In other words, quit borrowing money to pay your day to day bills. build up your emergency fund. Once you have a set amount emergency fund, I've talked about this in the past, no matter what the amount you set, one month worth of income, one month worth of bills, got to start somewhere 50% of what your bills are for a month, something so if something comes up, your car breaks down, you have money you can pay the fix your car without charging it on a credit card. Make your minimum payments, accumulate more money in your savings account because as long it's in your savings account, it could be used towards an emergency. Once you have to 3000 over what your emergency fund needs to be balance that you never go below unless there's an emergency then take That excess savings and apply it towards your highest rate credit card. If you have a credit card that you have a lower balance on, and it's not the highest rate, it's okay to pay that one off first and then buy your highest rate by paying your highest rate credit cards off. First, you're gonna pay the least amount of interest, which will free up more money to apply towards your other debt. And you'll see it start to snowball it's slow to get started at first, but over time that will pick up and it will start to accelerate. That's important. I'm not putting a commercial in here but I'm going to say if you go to show notes, I have the wallet nerd or wallet hub links and myself Show Notes. I have other links the average credit card debt if you want to, if you review that and I have some other links in there how to read how to get out of debt that I not talked about that there in my show notes because it could be interesting and informative reading for my listeners. That's why I'm leaving that in there. For to show in the show notes at the bottom it support the show. There's a website isotonic calm you can go to that my wife and I have together if you want to buy vitamins isotonic is a form of vitamins. It tells you all about it on that website. So you can go there, research it, buy it if you want if you don't take vitamins you should. Now I'm gonna give you an update on my reduced debt journey. A while back I told you I've had all my credit cards paid off Got my line of credit paid off. I got my wife's car paid off. So the only thing I have left is my first mortgage on my home. Six years ago, I refinanced it and made it a 10 year loan. So I got four years roughly left. And end of July, I'm making a payment, I'm going to pay almost half the outstanding balance off. So I'm making great strides when you don't have three or four credit card payments, car payment, and a line of credit payment. You can really save up money in a hurry and get that emergency fund build up and get your debt taken care of even faster. It's really snowballing. I'm really going down the hill on a rapid right now and my income is even down. I'm still working through the pandemic. I've never been You know, been laid off or anything, so that's a plus that my income is down a little bit, then I'm still making great strides. If you're struggling to get out of debt, just keep working at it, stay focused, it's gonna get better, and you're gonna be better off in the long run for it. Remember, you need three accounts a checking, a savings for your emergency fund, and a retirement account. If you don't have that retirement account set up. If you do not have a 401k or something through work, you need to go somewhere local banker, maybe your insurance agent and get a IRA set up and start putting money in there. Even if you only put $500 a year in there. It reduces your tax a little bit. And it's a start. something is better than nothing, because over time, it's gonna grow. The younger you are the earlier you Start, the more it's gonna grow. The more grows earlier you can retire, and the happier you're gonna be. That's the end of another episode. I hope you found it useful. And if you'd like to share this episode with your friends, please do so. I'm open for any suggestions for improvement or for information that you would like to talk about in future episodes. He can go to my Facebook page and leave me a message more than glad to comply. To find my Facebook page go to reduce debt, increase wealth calm and click on the Facebook icon to go to my Facebook website.