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50% of Americans Fall for This “Free Money” Trick · Triple Da Money

• 0:01
  SPEAKER_02: Why do you look like you just won the lottery?
• 0:03
  SPEAKER_02: Because I basically did.
• 0:04
  SPEAKER_02: I got this magic card now.
• 0:06
  SPEAKER_02: Watch, I get free Chipotle, free Uber, and free anything I want.
• 0:11
  SPEAKER_02: Wait, a magic card?
• 0:12
  SPEAKER_02: Where do I get one?
• 0:14
  SPEAKER_02: Uh, I don't know if it's for everybody.
• 0:16
  SPEAKER_02: We're brothers, we share their wealth.
• 0:18
  SPEAKER_02: It's exclusive, Austin.
• 0:20
  SPEAKER_02: The letter said that I was specifically chosen.
• 0:22
  SPEAKER_02: Chosen for what?
• 0:24
  SPEAKER_02: Uh, to never work again, probably.
• 0:26
  SPEAKER_00: Free money that shows up in the mail?
• 0:29
  SPEAKER_00: That sounds fishy.
• 0:31
  SPEAKER_02: It's not fishy, it's a gift.
• 0:33
  SPEAKER_02: Some things in life are made for special people, like me.
• 0:36
  SPEAKER_00: Stick around, because by the end of this video, we'll teach you some stuff that top finance people and most adults don't even know.
• 0:44
  SPEAKER_01: Seriously though, how do I get one?
• 0:46
  SPEAKER_00: Brandon, how exactly did you get this magic card?
• 0:49
  SPEAKER_02: Uh, it came in the mail.
• 0:50
  SPEAKER_02: And then I went online and I filled out a little form.
• 0:54
  SPEAKER_02: And then they sent me a shiny blue rectangle and said, congratulations.
• 0:59
  SPEAKER_00: Brandon, do you mean a credit card?
• 1:01
  SPEAKER_02: It said pre-approved.
• 1:03
  SPEAKER_02: That sounds much better than credit card.
• 1:05
  SPEAKER_00: Give me that.
• 1:07
  SPEAKER_00: It says$2,000 available credit.
• 1:10
  SPEAKER_00: Brandon, how much have I actually spent on this?
• 1:12
  SPEAKER_02: I've been buying Chipotle for my class the whole week.
• 1:15
  SPEAKER_02: I'm basically the king of school now, and everyone calls me Mr.
• 1:18
  SPEAKER_02: Guac.
• 1:20
  SPEAKER_01: Wait, it says you can pull cash off this, like an ATM.
• 1:23
  SPEAKER_01: I know exactly what I'm doing with my life now.
• 1:26
  SPEAKER_00: Are you talking about a cash advance?
• 1:28
  SPEAKER_00: A credit card means someone else pays for your stuff today and you owe it back later.
• 1:32
  SPEAKER_02: Wait, so I didn't buy Chipotle all week, I borrowed it all week?
• 1:36
  SPEAKER_01: Plus extra.
• 1:37
  SPEAKER_01: Don't forget the extra.
• 1:38
  SPEAKER_02: Extra what?
• 1:40
  SPEAKER_00: The part you're about to hate.
• 1:42
  SPEAKER_00: Average credit card interest rate is about 21%.
• 1:45
  SPEAKER_02: 21% of what?
• 1:47
  SPEAKER_00: Whatever you don't pay off.
• 1:48
  SPEAKER_00: Banks set the minimum payments low on purpose so it seems easy.
• 1:51
  SPEAKER_00: They make it like$20.
• 1:53
  SPEAKER_02: 20 bucks?
• 1:54
  SPEAKER_02: Easy.
• 1:54
  SPEAKER_00: That's the trap.
• 1:55
  SPEAKER_00: Almost none of it touches what you owe.
• 1:57
  SPEAKER_00: It's mostly interest.
• 1:59
  SPEAKER_00: The debt just sits there growing.
• 2:01
  SPEAKER_02: So I pay every month and basically owe the same?
• 2:05
  SPEAKER_00: Pretty much.
• 2:06
  SPEAKER_01: ATM.
• 2:07
  SPEAKER_01: Where's the nearest ATM?
• 2:08
  SPEAKER_00: Austin.
• 2:09
  SPEAKER_01: Wait.
• 2:10
  SPEAKER_01: I saw it.
• 2:10
  SPEAKER_01: Cash Advance.
• 2:11
  SPEAKER_01: I could pull cash off a credit card and invest it.
• 2:14
  SPEAKER_01: Index funds average 10% each year.
• 2:17
  SPEAKER_01: Free money, making more free money.
• 2:20
  SPEAKER_01: Oh, that's actually kind of smart.
• 2:22
  SPEAKER_00: A cash advance doesn't just charge 21%.
• 2:24
  SPEAKER_00: It's closer to 28.
• 2:26
  SPEAKER_00: And it starts charging interest the second you pull cash.
• 2:29
  SPEAKER_00: There's no grace period like there is for the normal purchase.
• 2:32
  SPEAKER_01: So?
• 2:33
  SPEAKER_00: So you'd be borrowing at 28%.
• 2:36
  SPEAKER_00: Invest in hopes for just 10.
• 2:38
  SPEAKER_00: That's a nearly 18% loss to chase a 10% gain.
• 2:43
  SPEAKER_02: Down 18 for sure.
• 2:45
  SPEAKER_02: Up 10, maybe.
• 2:46
  SPEAKER_00: That's not investing.
• 2:47
  SPEAKER_00: That's paying the bank for the privilege of losing.
• 2:50
  SPEAKER_01: Okay.
• 2:51
  SPEAKER_01: When do you say it like that?
• 2:52
  SPEAKER_00: I'm saying if debt costs more than what you make investing, kill the debt first, always.
• 2:58
  SPEAKER_01: A guaranteed 25, beat a hopeful 10.
• 3:01
  SPEAKER_00: Now you're getting it.
• 3:02
  SPEAKER_00: A quick nuance.
• 3:03
  SPEAKER_00: Something like a student loan costs around 6% interest.
• 3:06
  SPEAKER_00: It's a different animal.
• 3:07
  SPEAKER_00: It costs less than the market earns.
• 3:09
  SPEAKER_00: So most economists say just invest and make minimum payments there.
• 3:13
  SPEAKER_02: So it's the number that matters and not the word debt?
• 3:16
  SPEAKER_00: Exactly, but a 21% credit card is never the invest instead type.
• 3:20
  SPEAKER_00: That's the one you kill on site.
• 3:22
  SPEAKER_02: So what did the whole Mr.
• 3:24
  SPEAKER_02: Guac week actually cost?
• 3:26
  SPEAKER_00: $2,000 on the card.
• 3:28
  SPEAKER_00: Chipotle for the whole class every single day.
• 3:31
  SPEAKER_02: Okay, so how much do I actually owe?
• 3:35
  SPEAKER_00: Minimum payments at 21%, that takes almost eight years to pay off.
• 3:40
  SPEAKER_00: About$3,400 total.
• 3:43
  SPEAKER_00: $1,400 of that is just pure interest.
• 3:46
  SPEAKER_02: $1,400 for burritos I don't even remember eating.
• 3:50
  SPEAKER_00: For a title that lasted exactly one week.
• 3:53
  SPEAKER_01: And I'm down$500 on my cash advance already.
• 3:57
  SPEAKER_02: Wait, you actually did it?
• 3:58
  SPEAKER_02: I saw the potential.
• 3:59
  SPEAKER_02: This is the worst invention in human history.
• 4:02
  SPEAKER_02: Nobody should ever get one of these.
• 4:04
  SPEAKER_02: This is evil.
• 4:05
  SPEAKER_02: Agreed.
• 4:06
  SPEAKER_00: It's not evil.
• 4:08
  SPEAKER_00: It's good and it's bad.
• 4:09
  SPEAKER_02: There is no good.
• 4:11
  SPEAKER_02: I'm in high school debt.
• 4:12
  SPEAKER_00: You're not entirely wrong.
• 4:13
  SPEAKER_00: 50% of the American people are in credit card debt.
• 4:16
  SPEAKER_02: 50% of the country did what I did?
• 4:19
  SPEAKER_00: Paying 21% just to borrow money that was already spent.
• 4:22
  SPEAKER_00: Here's the thing: if used responsibly, it can help you out of situations and it can help you build credit early in life.
• 4:29
  SPEAKER_02: So it's not evil, it's just easy to mess up.
• 4:32
  SPEAKER_00: Extremely easy.
• 4:34
  SPEAKER_00: But we broke down exactly how to build your credit score on our credit score episode.
• 4:38
  SPEAKER_00: A credit card is not free money.
• 4:40
  SPEAKER_00: It's a loan plus roughly 21%.
• 4:43
  SPEAKER_01: Never cash advanced to invest.
• 4:45
  SPEAKER_01: Please learn from me.
• 4:47
  SPEAKER_00: Pay off the full balance every month and build your credit instead of letting it bury you.
• 4:52
  SPEAKER_02: And don't become king of the school through debt, because that Mr.
• 4:56
  SPEAKER_02: Guak title, it wears off fast.
• 4:58
  SPEAKER_00: Credit cards are extremely dangerous.
• 5:01
  SPEAKER_00: So just make sure that when you get one, you're gonna use it responsibly.
• 5:04
  SPEAKER_00: And if you don't think you can, don't get one.