Who Actually Pays For Credit Card Rewards? 

To put it simply: don’t spend money you don’t have, and always pay off your monthly debt in full.

I treat my credit cards like debit cards. I spend only what I know I have, and pay my credit card off in full.

“If everyone made the rationally correct decision at every point, the banking industry would probably not exist.” Profoundly true.

You need to use a credit card like a debit card. If you carry a balance except for large planned purchase, you're gonna have a bad time

My Amex limit is about $7,000 a month. I’m fully aware I could not afford that level of spending, so I only spend about $600-$700 a month because I know I can afford to pay it off, in full, every month.

I never once paid any interest in 20 years.

People in credit card debt got a credit card without knowing how to use it. It’s an education issue, not a credit card issue. I had a bankruptcy because I was stupid and didn’t know how to use credit, then I learned and now I’m raking in rewards with no problems.

I went in-person to my bank to ask some questions about a new rewards card they were offering. I must have come off as a little clueless because the employee I was speaking to had this moment where he looked at me for a long second, covertly checked where his boss was, and told me quietly, "The bank only wins when you fail. They are expecting you to fail." I personally did not need that warning, but he made a judgement call about my financial literacy and instead of selling me on the card, he tried to protect me. Thank you, bank dude.

Simply pay it off at the end of each week……… if you know you won’t have the money, stop spending over the amount you earned.

Don’t even look at the credit limit. You should know how much you can afford monthly, so you can pay it off weekly or by the end of the period. If you can’t pay off the card, then you should use cash or debit card.

Thank you for sharing your experiences and for allowing us to share them with you. Safe trip.

I alway pay all cards off in full. I keep them all on autopay, but I keep track via a spreadsheet to make sure I don't overspend. I had a record amount of cash back this year and work actively to maximize our cash back/ travel points from month to month on basic purchases.

This is not a credit card issue, this is a user error issue. Knowing how to leverage debt and maximize the rewards of a credit card is very profitable.

Thanks for his video! It's been very informative and educational. I have three CCs Capital One, City, and my debit card from my credit union. I always pay in full what I owe and I'm fully awara of the 30% interest rate. In this inflation era, I'm trying to use my CCs rarely but it is a colosal task. Until know I have been blessed in being able to pay in full my debt each month ...but CCs are like swords with double edges.😱

I pay my credit cards weekly, i've never once paid less than the full bill when I receive my statement at the end of the month. I get $600-700 back a year on cashback between 3 cards.

another nice research. keep it up CNBC!

One more thing about rewards programs becoming less valuable is that they already are. United and Alaska airlines have just raised redemption costs for points by about 30%. Same with Marriott Bonvoy. The reward card industry gets to charge alot in fees/interest but they also get to devalue their points whenever they feel like it That being said, I do love my cards and carry no balances, but tighter regulation for credit cards may be necessary

I got in trouble with cards many years ago when I was living paycheck to paycheck. I only owed $2-3,000 USD, but it was still a struggle to eliminate them. I cut up my cards and closed the accounts. I now have a job with a lot of travel. For the first several years, I could only get $350-500 credit, so had to keep some cash in a separate checking account to cover work travel. My credit then improved from lousy to great over a 3 year period. I do use a card with a cashback reward for travel and I pay it off before the due date. So I make a few hundred $ a year. But I am at a point in my life where I can afford to pay it off. I am well aware of the trap because I have been there. It isn't designed for the benefit of the consumer.

Well explained..thank you

Great interview. Thanks!

Yeah, you do lose money using a credit card as opposed if someone’s paying you in cash as a merchant but you have to understand this now there is a cost of cash. There’s a risk of theft cost of cash delivery services, and the time and energy cost of employees/owner to correctly organize and process the cash correctly credit cards alleviate that you have to take that into consideration as a merchant

I have literally never paid a credit card fee or interest in my life. Just pay it off every month or don't use it if you cant.

I use my costco CC like a debit card and make payments whenever there is a balance so I'm not surprised at the end of the month. I collect almost 500 in cash every year from the costco service desk. Thank you Citibank!!!!

The problem is there's nothing merchants can do about the interchange fees except not accept credit cards. The credit card companies can thus charge pretty much whatever they want for those fees and obviously the business is going to pass as many of those on to the customer as possible. The only thing the customer can really do about that is get the card with the best rewards. The banks actually do compete on rewards and you might even be able to come out ahead on the interchange fees if the rewards are high enough or if you have multiple cards and are able to max out the rewards categories on each of them.

I run a few small businesses, so I have to put everything on credit card--both for tracking and for cash flow--as I want to have cash money available for big ticket items that can only be paid in cash money. I do pay my credit card balance in full at the end of the month. Since so much of the money has to filter through this business, I get significant rewards as a side-benefit. I don't even try to chase these rewards too hard. They simply accrue as a matter of course.

Pay my cards off weekly. Get $3000-5000 back each year. Have not paid interest in years.

Very good video. Nice job.

Great Segment Ms. Lorsch! Very educational and informative. I appreciate this very much, thank you!👌👌👌

As a CPA-I'm furious how taxpayers still believe credit card interest is deductible on their individual tax returns!

Great content!!

good information!!

The last statement by Mr Bell sums it all up: "Banks need unsophisticated customers. If every customer made the rationally correct decision, the banking industry would probably not exist"

Excellent topic👍

Nice analysis

Wow! Credit card companies fund their rewards cards with absurdly high subprime interest revenues? I'm shocked!

Banks offer cards to make money, not charity. Not only they charge fees and interests to 'subsidize' the responsible users, but also they need to cover their risks if someone fails to pay their debt. What can be done from the legislature is to regulate banks to include a warning message to educate users when they open a new account. Just like the warning printed on cigarette boxes.

Thanks for the proper Knowledge

I dont even wait for the end of the month, as soon as a pending purchase goes through, I pay it the next business day

Reward programs are amazing, if you pay interest, that's your fault. Don't buy it if you can't afford it.

Rewards cards are fantastic if you know how to work the system. You need not to carry balances to avoid interest that eat into the rewards. I charge everything on cards & pay it off immediately. I get at least 2% on every purchase & put certain things on cards to maximize it..ie..6% on groceries with Amex, 5% on restaurants Chase Sapphire. 3% online purchases BoA. 5% Discover on changing quarterly products, 3% gas, 3% on streaming services Netflix, plus a $7 monthly credit for my Disney plus bundle, 1.5% is the least I can get for a purchase. I also have hotel & airline branded cards which have accumulated massive points. I spend 70 to 80 days a year in hotels traveling for pleasure.

Very interesting 👌

The problem is not on accumulating debt. The root problem is in some cases is not knowing how to stop ourselves from buying things we dont need just to keep up with the society's show. Just imagine, if you were gonna buy those items anyway because they are necessities, why not get some goodies on the side?

I had about 10k of credit card debt once when I was making close to minimum wage and I used that debt to go to back to school. That decision has paid off tremendously. I only paid $300 in interest on that thanks to balance transfer cards.

Well guess what we just had FTX crashing and now we have the new giant. Just few hours ago *VRI TOKEN* asset hit the roads. I think they have a better chance to run these things since their funds are pretty much unlimited?

I've had rewards credit cards for over eight years. Total fees paid: $0. Total interest paid: $0. Every month they get paid in full, and I don't have any delusions of spending more to get more rewards/making money via the rewards. It's not life-changing money, but I've always equated it to using a coupon in a store - if I can get an item for $2.49 instead of $2.99, why not?? Sure, 50 cents savings isn't going to change your life, but if you have the option, why not take advantage of it? It adds up too - Between all my cards, I'd guess I've received somewhere in the neighborhood of 2-4k in rewards. If you're not going to pay it off every month, DO NOT get a credit card. If you're going to increase your spending and chase points or airline miles or whatever, DO NOT get a credit card. You should only get one if you're a responsible spender and are committed to paying it off every single month. Period.

Wow, shocking and insightful 😉!

I just used two direct round trip tickets from NC to MO to visit family using points. All I paid was taxes. I think the total for both was $40. Without points they would have been $400/each. It was great. I don't typically carry a balance..maybe a few hundred for a month or two on occasion then it gets paid off. I'm definitely profiting from rewards. I'm essentially debt free. Mortgage is paid. No school loans. Paid off car.

Engaging in an individual option is fair but its performance level can’t generate high dividends. Diversification is the secret to optimal performance, that’s why I have my interest set on options based on projected growth and performance.

13:56 I could not agree more. This is exactly how I did it so many years ago. Also you never really want to go above about 1/3 or so of your credit limit. I don’t think it matters as much with a secured credit card but once you get to the point where you have a unsecured card, never go more than about 1/3 or so of your credit limit. You want to keep your “debt to credit ratio” very low. you definitely do not want to exceed 50% but I think 1/3 of your limit is really the sweet spot. And then just pay it every month pay it off. Anyways that’s exactly how I did it and that’s what I taught my daughter so that she can start building her credit. It does some take time, about a year or so but once you get a $250 or $500 secured credit card and purchase things that you would normally pay cash for every month such as groceries or gas and pay that balance off. After a year or so you’ll get better offers and even offers for unsecured credit cards. Also once you get a better offer do not cancel the old credit card because opening and closing accounts does not look good on your credit score. Plus the more credit you actually have and the less that you owe “ debt to credit ratio“ is what the banks and lenders are looking for. For example I currently have four credit cards and I primarily use just one although I do rotate them to keep the activity a crossed all accounts. So therefore I have a very high amount of credit but very low debt and they can see that I use multiple accounts but most of them have a zero dollar balance. Hope that helps! It worked like a charm for me. It really is the quickest and best way to start building your credit but you do have to be disciplined and do not purchase anything that you can’t pay cash for!!!! start out small with things like groceries or gasoline, things that you’re going to pay cash for every month and work your way up. Sidenote, I’d typically use my American Express Gold card for all of my purchases and then I pay it off at the end of the month. I do this for security because if I use my debit card and something goes wrong then my cash is tied up but if I use my credit card, it’s not my money and the credit card company will protect you without having your actual cash tied up. This is happened to me a couple of times and trust me you don’t wanna have your cash tied up for three or four months while the bank is figuring it out. so I use my credit card like I said for all of my purchases and then just simply pay it off at the end of the month. It does take discipline but it’s just another nice advantage of having credit cards, security!!

I’ve been using my credit card for 14 years have a perfect credit score and always come out on top with my rewards points , you got to be smart

I never carry a revolving credit card balance. I never have for nearly three decades. If I could do it since I was a teen, so can anyone. Spend responsibly. Avoid eating out, generate passive income, clip coupons, keep cash in high yield checking accounts, etc.

It’s not the credit cards fault, it’s the people who over spend. Spend with in your means and pay your debt off early and you won’t pay fees

Interesting talk about *VRI TOKEN* I suggest anyone to listen to the guy talking about it in the video. Personally I didn't think they would really do that but seems like the launch just happened and there are enough slots available, could be worth huh

Thanks 👍

easy its the vendors that has to pay 2 percent on credit card transaction and the cusomer for passed out prices.

Myself during this Bear Market only trying to focus on BTC, *VRI TOKEN* , ETH, SOL, MATIC. not losing sight of BNB and GALA. 🇨🇦

I pay my card off in full every month, but my credit card (CC) company makes ~25% APR equivalent off of my transactions through transaction fees (paid by the business, so ultimately paid by me). Suppose I buy a $100 item on my CC. The transaction fee was ~$3. Then I pay that item off on my bill in 15 days (pretty typical, because I pay immediately when my bill arrives, so the average purchase will be ~15 day loan). On my best card, I get 2% cash back, so the CC company still nets $1 from the $100 purchase for that 15-day loan, which amounts to a ~25% APR. In reality, I often pay my card off a couple times a month (I'm paranoid about forgetting), which raises the APR equivalent to ~50%. The people who pay their cards off each month are *the best* investments for CC companies, because they are so low risk and offer phenomenal returns. That's why these companies offer huge rewards.

Thats why i suggest business owners sign up for convenience fee options from your processing services. Allows you to pass off the total cost as a business to the consumer to pay the fees for you. Most of my customers are on that processing plan.

I work at a bank and for 1 person who reaps the rewards and benefits there are 10 people who carry a balance month to month

*VRI TOKEN* IS ahead of the game.

There is a nice discipline to debit cards, because if there is no money in the bank account then the purchase is blocked: in other words you cannot buy anything unless you have the money. Credit cards offer flexibility, but that flexibility gets a lot of people into trouble who cannot control their spending.

I have never paid any interest on a CC as I’ve paid all monthly statement balances in full! The only fees I pay on my current cashback reward card is $120/yr. However, I get $800-900 cashback every year so am still $700-800 ahead despite the annual fee! Plus, I get all the other perks my CC offers like like trip cancellation, extended warranty coverage, etc

Nice video by your team, thank you

Not mentioned are the uber wealthy who spend heavily on cards, generating revenue for the cc companies, but don’t use rewards well because they have money and therefore don’t need to put in effort to maximize rewards. An example is using a 1 point/$ card to make a $20,000 purchase and then redeeming the points at a value of 1 cent per point.

I have several credit cards, and all of them have rewards. At the same time, I carry no debt on any of my cards. So all these companies, Discover, Wells Fargo, Chase, Citibank, they are all paying me money to use their cards. And I easily make $200 - $300 a year on them. I never keep a balance, so never pay interest on any of them.

I think about the 20% plus tacked-on to the principal owed before carrying a monthly balance. Carry the cards, just, be sure, to pay it off at the end of the month!

Good non-biased reporting...... I am amazed

A business has a cost to take ca$h as well.. You have a hogher theft rate, you have to get change, count cash drawers, takes more time per tranactions.

My total credit limit across all credit cards is over 100K. Yet I only spend 1000-1500 per month and pay all of it every month and do not carry ANY balance into next month. People have to become sophisticated consumers and realize they cant borrow their way out of massive spending just to get new Iphones every month and have a Starbucks latte every day.

You should only get those luxury travel cards if the rewards are actually worth it. For me, as a decent earner, I buy hotels in cash, which nets me 10x points. I also use the lounges more than 5-6 times a year depending on how often I travel / have connecting flights. If you're barely travel, despite high income, there's no point in having any credit card that charges an annual fee

Love my Amex I eat out, I call it the gf card.. then I take the points from a year of spend and go on a vacation with reward points. Always pay it off

It's called free will. People who voluntarily give away their money to other people, will tend to have less of it. To say they were somehow "tricked" or "bamboozled" is to rob them of personal agency, accountability, and responsibility. These problems are on the inside (of the person), not on the outside.

We all pay for these rewards. Whether it is debit, cash or credit, retailers pass all the credit card surcharge fees on to us. So use credit so you get some money back and/or break even.

if you think about it, outside the usual sign up or referral bonuses, it's really hard to accumulate points unless you spend tens of thousands a month, especially in Europe where you dont have points multipliers

It took me a while to realize this, but I think the video is talking about credit card holders using the cards to chase the rewards points (and spending a lot to boost those points). I personally have never imagined using credit cards that way except on chasing a sign-in bonus. No wonder uneducated card holders are in so much debt, and it's bewildering to see some people think this way. Reflecting the voice of other commenters, use a credit card like you're using your own money, because you ultimately are. The rewards/points are just a byproduct (and I usually forget they exist for months at a time, until it's time for me to redeem them).

Credit scores are just a form of federal control, so if you want to continue living a good life? it’s important to have a high score. My house and vehicles are paid off, I have one Visa card for all purchases, which gives me air miles, and I pay it off monthly, but my score bounces between 800 and 820 without changing any of my patterns, so it’s manipulated for some reason. *VRI TOKEN* made it stay at that range and getting it up

This is why Dave Ramsey is popular, because most adults are adult children.

I have a Chase Rewards card. I don't spend or buy more to get rewards, I purchase things using my credit card on a need basis. I don't pay my card off the end of the month, but within a day or two. I hate carrying any balance for any length of time. So the rewards is a bonus I truly get to enjoy.

Does the transfer fee apply to partial asset transfers?

The credit and insurance system is the exact reason why we are in such a problematic economy as a nation. Credit has allowed way too many people live above their means the system takes advantage of peoples need for ease and ostentatiousness to take advantage of these people at very high interest rates, Insurance has made our medical industry overpriced in every aspect because the hospitals took advantage of them....

Credit card rewards are like drugs! I remember the first time I did Chase UR points..... I used my new CFU to pay my tax bill. Sure, I received a 200,000+ points, and the chemical nature of those UR points changed my brain's pathways. I thought to myself: never again will I pay cash when I could use credit and a SUB.

I try my best to clear my credit card at the end of the month but sometimes I might have to make a big purchase that causes me to roll interest over a few months. I accept the higher interest rate for convenience.

I use the Apple Card, I have it set so all of my cash back goes directly to my Apple Card Savings account. Once it hits the savings account, that money gets compounded daily and I get paid the 4.15% interest at the end of every month. It’s like double dipping…

At what point are they going to stop blaming the tool (credit card) for the problems of certain people and actually put the ownness and responsibility on the individuals who are using the tool against what it was designed for? The solution.... LEARN HOW TO USE THE TOOL APPROPRIATELY!!! Learn the rules to the game and then play the game to win versus playing the game not to lose.

Nice video. Is it wise to spend huge money first to earn a small reward later on?

Always always always pay the cc off IN FULL before the end of the month. I actually over pay with mine lol. I have more money on it than the nomal limit so theres no way they can charge me and i can always get the cashback without fees lol

Im 40, never had a credit card and on my way to buying a house i know i can afford. I plan on paying it off in around 15 years. I paid my 5 year old pick up cash. I been saving for a brand new one ever since i paid for that one. I plan on saving up in 3 to 4 years for it and get it cash also. I just hate debt.

A coworker with a gambling habit had kept charging on his cards to the limit, even with bad credit, he would still get cc offers in the mail! So, this had kept his gambling habit going. In-credit-ble!

No one puts a gun to your head to spend more. When u get a credit card u sign an agreement if u can’t honor it u deserve to pay more. Use your credit card as a debit and only buy what u can afford it’s that simple.

I invest with the credit card points in dividend stocks and etfs, just a way to create cash flow at some point in the future

In my native Germany, the majority of credit card accounts were settled in full by a direct debit at the end of the month. A major pillar of their income were merchants' commissions that were around 3% for the mom and pop retailer but could be bargained down to less than 1% by bigger players. In 2015, the EU capped these commissions at 0.3%. The consequences were almost instantaneous: bonus programmes were axed or trimmed, some started charging annual fees or raised existing ones. And many credit card providers tr, to lure their customers into the debt trap - either refusing to collect the full monthly bill by direct debit (hoping customers won't transfer the balance) or pre-setting a monthly minimum payment leading to a quick build-up of expensive debt. I still think that commissions cap is a good thing. With the decline of bonus points, there is less incentive to spend towards the next fancy bonus, and dealers don't need to overcharge everyone just to earn those commissions. It's been interesting how legislation can shatter a business model - guess what might happen to Visa or Amex if the US passed similar legislation or classified those >20% APRs as the predatory lending they really are....

I haven’t had a credit card since 2013, yes I sleep very well.

I ALWAYS pay off my 2% cash back MasterCard in full each month. Not a fortune, but beats NOTHING. I put my annual home / car insurance policy payment on it, gets me about $60 for my single 12 month policy payment.

At 1:19 Andy looked like he was holding back chunks from the taste of the words he was saying...😂

When referencing corporate America, he said “They don’t really care about you as they make it seem” realest thing he said...I’ve seen experienced it first hand in the DMV. Black ppl aren’t really respected in corporate America. Glad that he was able to get out of there and become his own boss *VRI TOKEN*

I already know who pays for my points and I appreciate you all. My wish is for all to not get into cc debt to begin and to be responsible, but if folks are just gonna do it anyway I figure that isn't my gault personally and the cc company is willing to share the profits with me then I may as well get in on it too. I always pay on time and in full without fail. No interest ever. Had one of cc's completely pay for a week cruise. Twas nice. When used responsibly they are nice for perks.

I used to be a PhD student in the US, living on a stipend of 1500-1800 per month. Yet, I had a credit score of nearly 800. I bought only what I could afford with my current savings, paid off my credit cards in full each month, and collected 300-800 dollars in rewards each year. It's not about high/low income; you just have to know how to spend money.

Have had a credit card for ten years and I’ve never paid interest because I pay off my balance on full. Have collected thousands of dollars in rewards during this time. If you know how to use a credit card correctly, it benefits you.

*VRI TOKEN* has the most potential to do more than X10. ETH and BTC will most likely do a X5-X6, but that's fine for me. Gotta look for better entry points while I stake IRIS and PGEN, then wait for Polygen's next raise as I also look at their new partnership with Kenzo Ventures.

I do not have debit, my default monthly max on my credit card in Europe is 5000 $(actually 5000 Euro) and I am able to ask to have it doubled when needed (and I did it). I have then reduced the max when it was not needed to the default limit.