123 - From Debt Trap to Profit Tool: Credit Cards Rewired

Credit cards get a bad rap, but they can be one of the most powerful tools in your financial toolkit—if you use them like an investor. In this episode, we break down:

• How 0% APR balance transfers can be used as short-term liquidity for higher-yield investments.
• Using credit card cash back and perks as bonus money saving to give you and edge.
• The difference between credit stacking vs. laddering—and which one fits your situation.
• The real impact of your credit score on freedom, access, and opportunities.
• Common pitfalls and traps people fall into—and how to sidestep them.

Whether you’re building credit from scratch or looking to turn banks’ money into your money machine, this episode gives you the playbook to flip the script. Credit is a game. Learn how to win it.

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Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

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Transcript

Welcome to roaming returns a podcast about generating a passive income with dividend stocks so you can secure your finances and liberate your life. 

Credit cards aren’t evil. They’re not out to destroy your financial future—unless you misuse them. In this episode, we break down how credit cards can actually become one of the smartest tools in your wealth-building arsenal. From balance transfer arbitrage, to stacking rewards, to using credit as short-term leverage, we’ll show you how to play the credit game like an investor, not a consumer—and how to avoid the traps that keep people broke. 

Okay. All right. We are back guys.
We're back, oh yeah. With some freaking ridiculous talk about credit cards. This is a cray cray one.
Last week we went over financial traumas and specifically habits and how to. And everybody skips over that type of stuff but I'm telling you guys that is some of the most important foundational pieces. I know it's boring, I know it's trite and I know it's painful but it is a massive leverage point.
Just gonna put that out there. So and then like we went over habits and how like a lot of people see money as like a status, like the more money they have the higher status they have and how to improve your relationship with money. This week is something completely off character for us up until recently.
We're gonna talk about using credit cards. As a tool. In a financially responsible way as a tool.
As a tool. We recently sat down with one of her friends who for the lack of better words, he had like a pyramid going on. Well, so he was in a shitty situation.
His ex, crazy, crazy, crazy baby mama drama. Like just crazy. I don't even know how the heck she got him kicked out of his own apartment.
Cops somehow always think it's the guy in Pennsylvania. I don't even know, like crazy shit. So a lot of that debt was actually because of a lawyer situation and like there was all this crap that went down.
Anyway, so he ended up like living off of credit cards for temporary and like with that thing till jobs came through and it was this whole felony thing that went down, it was retarded. But anyway, so he ended up with a lot of debt and he was doing these balance transfers to like manage it while like money was coming in and like all the situation. So it was, honestly, it was a beautifully orchestrated pyramid.
The credit cards make hand over fist because they literally take 4%, 5% the minute you do the balance transfer instead of the full year. Like if you would get a loan, it's like incremented out through each month. Like I can see why credit cards actually have that as an availability.
So I didn't realize that I, because I have like 90-ish thousand in credit card of equity or availability or whatever and I didn't realize I had never done that and I basically put up that for him until he can get his credit score back up to get his shit figured out because he had a lot of really sketchy ones where they have like sneaky fees and like 36% interest, like absolutely insane amounts of crap. But if used properly, the whole reason we're talking about this, credit cards can actually be a very useful tool because we just recently looked into getting loans for a HELOC and something else and with closing costs to try to help him out of this hole just to explore options and I was like, I'll be damned, the credit cards actually are the better option with that 0% for the year, the 4% up front for the 12 months to like get back on the feet and then you can roll it into something as a better thing because like when I was looking at the equity and like the one for the rental property, like you're paying $3,000 in closing costs which is just like, and then there's like a prepayment or early payment, early prepayment penalty. Man, I can't talk.
English is my first language. So anyway, very, very interesting stuff. So like what I learned when sitting here watching this.
Watching him juggle this and like have a. One of the first things that shocked me was he had credit cards issued from the same bank, different cards. So he had maxed out a card with the bank and they gave him two or three other ones. So that to me was insanity that the banks are still doing that.
From what he explained, it's like a risk. If you've never missed a payment and he never missed any of his payments, so they're making money on him so they take a calculated risk. That's what we do with the Yieldmax.
We take calculated risks. So to be honest, like I can't fault the credit card companies. Now, I will say that the interest rates are pretty criminal and I really feel like the government should crack down and have like a cap limit because like 36% interest is a little egregious.
The second thing that I saw that was like, this generally would be a huge no-no for people was he was using one card to pay off another. So like he would take a cash advance or a balance transfer on the new card to pay off his other credit cards. And that's how the pyramid becomes unsustainable at that point because you're basically taking money that you don't have and you're getting money from a credit card company and put it into other stuff so you're going deeper into debt with the money that you don't have.
So that. His made sense because it was like stoning to a certain timeframe type deal with the job situation. Like again, it made logical sense based on the circumstances, but that again is how people dig deeper and deeper into a hole.
The third thing was the amount of patience you need to do this because you have to call up each credit card company at the end of the month and like haggle with them to get the fees dropped off. And he said, what he said was if you can get like the fee waived, like if it's an annual fee or it's a late fee or whatever other fees they got going on, if you can get like half of them waived on half your credit cards, it only took him like an hour or two to do it. He made like $200 that way.
So he was making like $200, you know, $100 an hour. You're saving $200 an hour. So it's like, it's kind of worth the effort even if it is like mentally grinding.
So you need a lot of patience. That's the third thing. I do want to go back to the one where we were just talking about using one to pay off another one.
He ended up accumulating $25,000. Like by the time we started talking to him about this whole thing, and he was literally getting charged like $700 a month in interest. So by the time like this whole thing finally went through, like it went up further.
I was like, holy hell, like talk about bleeding and drowning. So it definitely can get out of hand quite fast. The very first thing I said was a responsible way.
Responsible way. You have to be responsible to credit cards because it does like, like I just got a credit card that has all sorts of kick ass perks, but it has an interest rate of 29%. Well, and Tim just signed up because, or my friend was telling us that Chase will only approve you if you haven't had any inquiry polls in the last two years.
So if you have not done that, that is the first one that you apply to because like otherwise they DQ you no matter what your credit score is, no matter any of this stuff. And we'll get to like the benefits of why I went with Chase here in a while. So.
So. Well, not for everybody because there are a lot of people that aren't like financially responsible when it comes to credit cards. And we say responsible.
You don't use credit cards to buy stuff you want. You use credit cards to buy something that's going to generate you money. That's what we mean by responsible.
Or that or like say groceries. You put groceries on a credit card that you normally would have put on your debit card. You put it on the credit card, you accumulate the points and then you pay the credit card off at the end of the month.
And that's why I signed up for a bunch of credit cards back in October was to get the cash back because you're making 5% free money if you do it right on stuff you're already spending money on. Because when they're used responsibly, they actually are a valuable financial tool that can help you build credit first of all. Since it's a game in the system.
Offer superior fraud system. Like their fraud system actually is better than my bank, Wells Fargo. Yep.
So that's really good. So if there's a fraudulent charge, you just call them up. They're like, okay, they'll wipe it off.
It's cool. And credit cards will actually provide you rewards on purchases, whether it's cash back or whether it's, if you accumulate so many points, you get free shit. We'll get to all the rewards in a while.
And in an ideal world, if you're never using lending and stuff, your credit score wouldn't matter. But if you're renting, you need that for landlords. You need that for certain things.
And there are certain states where certain jobs, your credit score can actually impact your ability to get hired, which I think is absurd. I don't think Pennsylvania is one of those states, but. So for people who can pay off their balances each month or actually do a balance transfer and pay that off within the zero interest period, there's actually a lot of benefits to credit cards.
The first one is it's going to help build your credit history. Like it or not, agree with it or not, it doesn't matter. But your credit score.
It does impact your life. It's super important. It does impact almost every aspect of your life.
I do think it really impacts your insurance for your cars and stuff. It's insurance. It's student loans.
In some places it's rent. Some places it's jobs. So it severely impacts your life if you have like a 500 credit score.
So what credits do is they actually build your credit history. They actually help you establish credit worthiness, which basically is a fancy way of saying your credit history demonstrates your reliability as a borrower to lenders, landlords, and even some employers to actually maintain financial discipline. Yep, and pay them.
Exactly. It actually will improve your credit score by if you use a credit card for everyday purchases and pay the balance on time, it helps build a positive payment history, which is a vital factor in your credit score. It's like one of the biggest numbers they look at when they look at the credit score.
And as your credit score goes up, you actually get way better interest rates. So like if your credit score is like mine was, like you just saw, she said 36%. Mine was 28%.
That's because my credit score was like 800. 36%. Mine was 28.
So mine was 8% lower than his. Oh, his, yeah, because his dropped when his ex like maxed out on his car. So you got a good credit score can help you qualify for lower interest rates on mortgages, auto loans, and more credit cards.
Because mine was really high till I just put all this debt onto my credit cards and it's dropped like, I think like almost 70 points. That's one of the things they don't tell you though is anytime that you sign up for a credit card, they do a credit pull and a credit pull actually lowers your score no matter if the credit pull is successful or not. Well, there's a multitude of different things.
There's the credit pool. There's your amount that you actually have on credit versus the amount you have available on credit. And then there's like credit history.
There's a whole bunch of stuff. Like you can go onto like FICO.com or whatever. And like there's forums, there's all sorts of stuff.
We'll actually drop a link to that in the show notes because my friend is the one that told me like that's where he basically learned all this stuff from and it sounds like it's a very, very good resource. We haven't deep dug into it. We're just like dipping our toes into, I guess using credit cards more as a tool tool than just like the cash back component.
Okay, then the second benefit of credit cards is the rewards and the cash back. Like earning cash back for stuff that you normally spend on is ridiculous. So many cards offer a percentage of your spending and it's either 1%, 3%, 5%, whatever it is.
So they actually give you that back at the end of the year, however much you spent that year up to probably a cap of like $5,000. So they say they- Most of them have a- Like say there was groceries, you got a card that said 3% back for groceries. So like instead of putting your groceries on your debit card, use your credit card and at the end of the year, you'll get like a 3% of like $5,000.
I think most cards have like a cap of 500 a month for you to be able to use the thing on. Except Capital One. Capital One has like basically unlimited and usually the ones that have the 1% have unlimited.
But what I did back in October was I actually found like all the categories that we were spending. I think we did a podcast episode about that with the different cards on like what has the highest percent for what you're using. So we looked up one for gas for groceries for, there's another one.
The grocery, like the one that shocked me was Tractor Supply was a card. Actually that one doesn't no longer code. That one doesn't code anymore.
So we have to use a different card. That actually surprised me. I thought that was- But Dining Out has its own category.
Flying has its own category. I generally travel. Travel.
So if you do travel- Grocery stores, gas. But we wanted to max out- Renting a car, shit like that. They have different categories for different categories of your life.
They have streaming. They have sports. They have all sorts of different stuff.
So if you actually spend a lot of money on certain things, like you can literally get money back on stuff you're already spending. But we wanted to max- It doesn't sound like a lot, so like 3% is not a lot, but like it's still- We're getting five on gas, groceries and stuff. But it's still like if you think about it, you get a couple hundred dollars back at the end of the year for something that you would have bought anyways.
You're basically paying yourself in December for buying your groceries. It's kind of like those points cards you have for like if you've eaten here 10 times, you get a free yogurt or something. Like it's the same concept.
You're already, you're getting rewarded to spend money. Now some credit cards actually will like go beyond the cash back and they'll actually do points and miles. The miles obviously pertains to like airfare.
So you can get accumulate miles. Like if you accumulate 30,000 miles, you can actually get a free plane ticket to somewhere. I did actually do some research on that for a temporary thing.
And like if you are a big traveler and the points, that actually comes out to your benefit than the actual cash back does. So like look into that, but we never spend enough, but we don't use planes. Like we don't rent cars.
We don't stay in hotels. Ours, it doesn't matter. So for us, the cash back makes more sense.
So they will actually offer you rewards for points or miles that can be redeemed for travel, gift cards or merchandise. So like it- I've done it before. Different credit cards have different things.
But the one that I really like is the fourth one of the perks and of the benefit of this category, whatever it was, of points and miles and cash back and shit like that is the signup bonuses. So like what I just did with Chase was I signed up for a new credit card. I got it.
And if I spend $500 within X amount of days, I get- I think it's six months or three months. I get $200 back. That's a heck of a return on like investment, on money you were already gonna spend.
So we just like- That's a 40%. We just stopped putting money onto my credit cards. We started putting money onto his for like gas, groceries, like our normal spending.
And we're already, I think like, I think we're like $170 away already in just like a little bit of time. So we'll get that $200. Now I'm not sure if you can actually, I would think you could like, so like once I hit $500, I think I actually could go into Chase and say take the 200 and apply it to the $500 principle to lower it down to 300.
A lot of them let you put it right down to the balance. But I actually want the money back because I'm a Jew like that. Well, it's gonna go back to me.
I actually want them to send me a check. Oh my God, you're hilarious. They do have that paper dumbness.
So, okay, the third area where credit cards are really, they offer a lot of perks. I do wanna say you can strategically like open and close cards. Now that will hurt your credit, but you, if you let it lapse long enough, you can get those bonuses again.
So a lot of people do that like bonus churning for credit cards. I did open three credit cards all at the same time. And it was really difficult to actually hit all of the minimum balances to get those bonuses because I did it all at once because I wasn't thinking about that.
I would not recommend that or something to be aware of. Okay. Okay.
The third one is actually they have really, really, really strong financial security. So their fraud protection, like I said, is better than Wells Fargo. Wells Fargo, if there's like a fraudulent charge, I'm like, hey, there's fraudulent charge.
They send me a big ass form to fill out. Oh, I know. It's ridiculous.
Then I have to take it back into Wells Fargo so they can look into it. And it takes like six months where it's with a credit card. You'd be like, hey, there's a charge on here that I didn't do.
And they pull it off. It's like days. They offer fraud protection that's crazy.
If your card is stolen, your liability for unauthorized charge is typically capped at $50, which is a federal law, but like they'll actually do the zero. So like if you lose your credit card and someone uses it, you're not liable for anything. You're gonna get a new card in the mail and everything.
And because a credit card draws from a line of credit, it's separate from your bank account. So like whenever a thief gets ahold of it or someone finds it and they get ahold of your credit card, they can immediately drain your bank account, giving you time to actually resolve the issue. So that's another area of fraud protection that like most people don't talk about.
Like if you lose your credit card, it's not really that big a deal. You just call them up and be like, look, I lost my shit. No purchases made after such and such time.
And then it'll be resolved quickly. Whereas with a bank, it takes days. Months, weeks, yeah.
Okay. That's the third area, the fraud protection. I think credit cards are worth it just from that area alone, the fraud protection.
But there's the other ones we've listed. And the fourth area is benefits from added perks. Like a lot of cards will actually include perks such as travel insurance, rental car coverage, and access to airport lounges as part of the benefit package of the credit card.
Airport lounges. With the Chase one, I got a rental car. I can get like a rental car at an airport.
I got fuel. Like if I run out of gas, I can call up the credit card company. They'll send someone out with five gallons of gas to get me to the gas station.
I got like a triple, almost triple A thing. Like where I can get towed within five miles to a garage. So there's like a lot of perks that come with it that they don't really broadcast them.
But if you read the fine print, there's all sorts of kick ass perks. One of them is travel benefits. Another added perk is purchase protection, which I actually did get that on the Chase card as well.
Like if I go to say, not Circus City because they're dead now. If I go to Best Buy and I put a laptop on my credit card for like $800, I get the Best Buy protection plan, which would be a year. And then Chase actually will attack on an additional year for free.
I just have to say, hey, I bought this computer with this charge and they'll give me an extra year of protection on that product. That's pretty cool. So there's a lot of cards that actually will provide you purchase protection that will actually extend the warranty of things beyond the warranty you get in the store.
I think some of them actually do the same thing with phones. Like they'll actually give you a new phone or phone coverage or like break, damage, whatever replacement. And the fifth area would be flexibility and insight.
You get access to short-term financing. Credit cards actually can be a lifeline for unexpected expenses. And they can give you a short-term loan, generally 12 to 18 months where you get a 0% balance transfer, where you basically say you need like $5,000 to fix your car, where you get a 0% balance transfer for 0% so- Well, it's not 0%.
Usually the transfer costs you a fee and it's like four to 5% and then it's 0% interest on that balance. So they hit you up front, but that's easier than getting a personal loan. Like a lot of those you get rejected because they're unsecured lines of credit or you have to like freaking submit your W-2s and all this other stuff.
If you actually have credit cards that have like an available balance that you can transfer, like you can get that day of with like, I'm serious, like barely any questions asked. And like a complete sidebar, a lot of people are really talking about interest rates right now. Credit cards generally have insider knowledge.
So like the 0.25 interest rate that just happened, the credit cards have already accounted for that like probably in July. So like we're gonna have 0.5 probably before the end of the year. So it'll be 0.75 total by probably by the end of October you'll see like, because most credit cards have a variable rate.
So when the rates go down 0.75, it actually should show up well before like the Federal Reserve actually says we're lowering rates 0.5%. So if you have credit cards, you'll see that your interest rate has gone down and that's because they actually have insider knowledge. And it's a great way, like if you don't want to physically go in and like look through all of your debit charges for your budget and to track your spending, if you put everything on a credit card, it comes in one page and it's all there. And like it's- Well, what I find nice, like when you go in, the ones that have the points in the cashback, they'll literally tell you what categories they're in, which is super nice.
Cause it's like, okay, this one's groceries, that one's gas, that one's whatever. And it literally just tells you, so you can get like an easier thing to see like what you're spending in. It's pretty cool.
Okay, so that's the benefits. So generally you cannot use one card to make a regular payment on another. However, you can use a credit card balance transfer to move debt from an old card to a new one.
But there is a fee for that transfer. And other methods like cash advances can also provide funds but come with high fees and interest. Before using the balance transfer, she keeps bringing up the transfer.
So you understand the transfer fees and you want to watch for high interest rates after the intro period. So like if you are transferring say $10,000 and it's 0% for 12 months, but then it's like 36% on day one of month 13, I'll make sure you either have that paid off or know that going in. The other thing they get you, and I didn't actually know this with, I think it was the Discover one or Discover may not actually have this as a thing, but Capital One was like warning red flag, you need to acknowledge that we've told you this.
If you have a balance on that card for normal credit card purchases before you do that balance transfer, and then you do the balance transfer, anything that was before gets paid last. So until you actually have your transfer paid off, that money that was sitting there in charge before is still accruing interest even though you have a 0% interest on the actual other balance. So you're going to get hit with interest over the full 12 month period for that thing because it's not applying it to that old balance.
You would think first in, first out, first paid, that is not what they do. And that is like a hidden thing, so you need to beware. I actually had two recurring payments on the one and I had to move it quick once I realized that was a thing and put it on a different card when I took that thing out to make sure I wasn't going to get hit with extra interest crap because WTF, man, like that's sketchy.
Totally sketchy. So how a balance transfer works is you say I'd like an amount of X, $10,000. What you do actually, you go into your credit card, you check the thing and a lot of times they'll have promo codes available or they'll have promos.
You just click apply. What a lot of them will do is they'll actually just send enough money to cover your old credit card. So that's why I kind of like the just $10,000.
Well, you can actually have it apply when it was asking me questions. You can have it apply to other stuff but to me it was just easier to freaking go in and just get a lump sum and then do it on my own.

It's just way less crap to stick in there for them to like have the third party into tracking yada yada yada And the benefits of a balance transfer like we've already went through you're basically getting you're getting the frickin 4% loan instead of a 7% Yeah, so like I said we went to apply For like a HELOC and this other stuff and like the interest rates are gonna like 7% 8% and I would end plus closing costs Plus waiting 30 days for the approval plus having to have W-2s and we don't really have a lot of like normal income You'd have to have justification or like Those types of banks like asking and then the one bank was like well if this isn't your primary residence Like you can't actually take a HELOC out against it blah blah blah blah blah You'd have to change your address and I was like, well, that's starting to get into red flag territory I was like is this even worth the effort to get denied or to have red flags go up and I was like screw that I was like, alright, let's look at other options So we looked into the like leveraging the brokerage account and then because we're like right at the minimum line I was like why I don't really want that to change and then have a problem So I was like, what's the other option? And then when he said balance transfers, I was like Shit, I didn't know this was a thing. 4%? That's cheaper than I would have got with a freaking HELOC Yeah, the fees are generally but generally not always but generally between 3 and 5 percent of the balance Mm-hmm, and then it's 0% from there Generally, you can't transfer a balance from one card to another from the same bank So like in her friend's case when he had cards of like four cards from the same bank He couldn't get a balance transfer to pay off the other three That's just so you just I'm assuming he just took it and paid off the other 16 and just did something with those three What the balance transfer was from me? Generally before he did it before. Oh, yeah.
Yeah, I'm assuming he doesn't run. It was from us shit together They're my credit cards. And The biggest the biggest thing to take away from balance transfers.
It doesn't eliminate that it just moves it from Yeah, one place and it lowers the interest rate. So it gives you time it gives you time to pay Again if you actually had a better option or cash somewhere else that 4% might not actually be your best Avenue Depending on what you're doing with it and again caveat it can buy you time for stuff But we like the idea of using credit cards to actually use for investments to do that interest rate arbitrage thing Because there are good and bad types of debt. I don't even know if I call them good and bad It's just like assets and liabilities Like for a prime example, like we've talked about THTA, for example, it yields 13% and it's pretty consistent It's been in like the 1498 to 1513 range for like months now So theoretically you could get a balance transfer of $10,000 put in your bank account Dump it into Your brokerage account you accumulate 13% on that $10,000 for 12 months And then you would literally just take out what you on the credit card Pay the credit card off So you're so you're within the balance transfer and then you would have like whatever you made You could make $900 off literally just doing you have $900 to THTA left over.
Yep So that's like how we would how we were going to use it moving forward The next area is cash advances I wouldn't recommend these but some people are in dire straits a cash advance is you get You use one credit card to get a cash advance. Basically you say hey I need cash and they'll charge you some ridiculous The fees are bad on there is a difference between a cash advance and a balance transfer cash advances are the more sketchy route Balance transfers are actually more reputable and I actually thought the balance transfers were the sketchy I didn't realize there were two separate things. So that's why I never looked into it Like the low end of the fees is 5% but the high end I've seen up in the 20s It's like you can get you can get cash advance from your credit card, but like generally it's like 20% interest around there So that that's the huge drawback with the cash advance You're just paying you're paying like probably 15% more in interest So that's that it doesn't doesn't compute when you can get a balance transfer for 4%.
Mm-hmm okay, so Important considerations before transferring debt. This is something that everybody should do You have to read the fine print like you have to pay close attention to the fees the length of the terms the length of the APR period And then the variable interest rate that applies afterwards What they do like what they're banking on is that you're going to take on more than you can pay off So like once the once it ticks over to the first day of the 13th month, you're gonna get a huge Even if you paid off say 9,000 to 10,000 you would think okay. I have $1,000 left up left over That's what I'll get Someone actually said you have to pay interest on the full amount You will see you will pay the full you will pay interest on the full 10,000 even if you paid off 90% of it So it is like a race against time so like these are good for strategic use but not good if you're like One thing you have to remember is if you use the balance transfer to pay off credit card Don't use the old credit card for new purchases.
Mm-hmm Yep, because that you basically you have your shit together. You have that big clump of debt in the new car You're gonna use the old card and max it out again That's just then you're gonna be in a situation similar to what her friend was You then one of the things you want to do you want to do a basic math equation? You want to make sure that the savings from the low interest like the 0% APR with the balance transfer fee is Actually saving you money if it's like not saving you money There's no point in doing it exactly must have a plan to pay it off because you don't want to end up paying $2,000 in interest you also want to have a plan to move any remaining balance if you didn't get it paid off in that 12 Month to something else or be able to pay it off with a different loan So it might be able to buy you time to then get a HELOC or get something else because what the when we I did the loan was looking over the loan application for the Rental property that would have been a 30-year loan at 4% Which is like so stupid small that I could have taken out a huge amount of money and actually done a lot of really cool Things with it now granted it did have closing costs with it Which would have been worth it if I would have been able to kick that out at like four or five percent for that long Of a freaking time that's insane, but it did have the early pipe prepayment or penalty So factoring that in I would have actually done that to Leverage again into investments from a thing which we probably actually will consider here at some point. Why not? That's definitely just another experiment to run But again having that backup plan when you hit your 12 months and that zero interest goes away like you need to be able to Move your money.
Otherwise you incur all of those fees No, we get to the good stuff what we actually were watching. Although I call it a pyramid scheme. It's not a pyramid scheme It's called credit card stacking Well, it actually is a name what credit card stacking is is a financial method where businesses are individuals strategically acquire and use multiple credit Cards to access a higher combined credit limit and very various benefits like 0% APR Generally business owners or individuals we use their personal credit scores and income to qualify for numerous credit cards often Focusing on business card to actually protect their own personal debt Their personal credit from the debt, but like a like sometimes you can't help it.
So it's gonna be under your name What it does reason why people do it is because it provides you to like stupid amounts of capital for startup Bills and expenses and stuff like that and it offers Ridiculous flexibility beyond like traditional loans because the credit cards just like they're easier. They don't care quicker They write off their debt. They freaking sell their debt They don't care like if they make money and it's like a certain risk ratio to them they literally not generally to do the credit card stacking you that you have to have a great credit score to start with If you don't have a physical like a lot of people have lower scores There's a the credit card ladder approach which is a basically how I think he got into where he was He got one card with it with like, oh, dude They were tiny limits and these were like sketch small small limits and they have like a annual fee on them Yeah but once you get once you get one and you pay it off and you show that you're responsible like that provides that provides other credit card companies that you're responsible so then you can actually ladder from the one with the annual fee and like a 30% interest rate to another one that would be say an annual fee but only a 15% interest rate So you're laddering up so you're going up you're getting better credit card Well, and what happened again? He had a really good credit score and then his his ex trashed it and all that So then he had to get those low-end grimy ones were like I think his maximum like line was like $1,000 So he had to have like 20 cards And I would like the thousand as opposed to like being able to get one or two cards for the exact same amount of value He wasn't eligible because his credit score dropped so much so if your credit score is lower you can start with some of these other ones and if anybody is interested in like which Companies are good and bad like which ones are super grimy and they'll just like tack on fees and the lie on the phone and they'll do all this stuff and Like they won't like some of them won't even let you like make payments He was trying to pay him and they were like rejecting payments and he was like what the hell like I think surge was That one like absolutely ridiculous, but I have a whole list of stuff like gotta be realistic Are you basically you don't want to do that? If you have a piss-poor credit score, you're gonna start at the bottom So you realistically I'm gonna be starting at the bottom So you're gonna be getting the ones with annual fees and high interest rates and they're crazy like they're just but what you guys do shit What you can actually do without doing that is actually just let somebody put you on their card as an accredited user or like a Acknowledged user or whatever the heck it's called There's no risk to the person with the credit and you get all the benefit of their good credit score Like I could literally add anybody to any of my credit lines and they would literally just get my perks on their credit score So there's a I think it's an accredited user or something, but you don't even have to give them your card.
Nothing happens They're just like they just share your credit You have the stacking for the people with good credit and you have the ladder for people with bad credit the stacking basically What happens is you'll have a person they'll say look at a look at one card that has like say a $10,000 limit And then they'll then they'll use their Probably a little probably wait a couple months use their really good credit scores and then get another card with like a $10,000 limit So they can open up like probably five or six different Credit cards within a year without hurting their credit score and they'll have like 50 50 thousand 70 thousand dollars in available credit Which will actually make their credit score go up because they'll have a you to low Utilization rate of like not much on credit cards and a high availability, which is what happened to me so before like before a year to go by like these people that do the stacking will have Just ridiculous like hundreds of thousands of dollars in available credit I think my friend said he was trying to hit like he wanted to hit a million hit a million dollars in available credit He got up to nine hundred thousand. He said The other one is the credit card ladder, which I like most people are gonna start the credit card letter You have to assess your starting point basically, you have to go to the FICO place and get your credit score and your credit history and Then you'll be able to identify like what cards you can go for Yeah and one thing he did tell me was like credit cards score credit cards will give you their own version of a FICO score and Like banks use a different one, which is technically the more Real FICO so like even though discover was telling me I had an 810 Credit score. I was actually like what did that thing say? 746 764 764 so I was in like they're a too high risk for whatever the heck That's a huge difference.
It was like 804 804 and if you know me my credit was like probably 100 for the longest It was in the 500 to like low 600s forever Then I sold my house and like my credit just shot it went from like 600 up to 800 It's all your friggin lines of credit. So when we sell this, I'll probably have like a massive jump But then second step is you basically you're in the credit card ladder You're gonna start with starter cards starter cards are the ones that have the shitty fees and like you have the low I would just try to go with like a federal credit union even if it's tiny and like if you're young the best thing you can do like length of credit is like Something you can really really do and I think I think I got like a student card when I was like 18 or something So I've had credit basically the whole time and I just only put like I think gas on it once in a while and just like paid it off and Then once you get your starter cards You basically start building the foundation with your on-time payments and you keep want to keep your credit utilization low you actually want to keep That I think it's below 10% below 30% 30% to get better offers like once they say hey this person has $6,000 available credit, but he's only using like 20% of it. So he's they must be credit like they must be responsible So we'll give them more credit card offers But what's crazy to me is like when I just put that $30,000 on to my credit cards Three of my credit cards literally upped my amount of credit like randomly.
I was like what the hell which actually helps me But it's actually the ones like once you got the strong foundation then you progress the mids mid to your cars are the mid to your cards would be like Capital ones and shit like that and then yeah I want you to do the same exact thing with you can make sure you make on upon on-time payments and that you Probably I guess demonstrate responsibility you can actually get the premium cards and I guess the chase cards are like like some of the best ones because they have like They have they are no fees. They have travel perks Unless you're spending Ridiculous amounts of money to make those fees worth it Like we do not spend that amount of one thing that I would you say that you actually have to keep like regularly monitor your credit report to make sure that your credit is Accurate if it's not you have to like dispute it with the credit card with the credit score people I've never pulled mine until I got those credit cards back in October and I pulled it and I actually have some random thing on There that's like I don't even know what it is So that's hurting my credit even though my credits as high as it is I think it will drop off this year or like when I pull it the next time so I was like debating about actually even like saying anything to go through that process probably should have but Whatever now the benefits of the ladder and stacking approach is you get better credit like over time It's just naturally happens because your credit score is gonna go up because you have so many open lines of credit and you're not maxing Out so you're gonna have a better credit score. And again credit is a game It is a really rigged system But at the same time it does become a tool for you to actually have more money potentially to invest or grow your assets Faster, that's some that's the whole reason we're even considering Like debt anymore The biggest thing that no one ever talks about is it actually it does increase your financial flexibility because you actually say you don't have an emergency fund set up you can just put that money on a credit card and Pay that off like you like what you like you would be putting money into your emergency fund Well, even if you have an emergency fund I'd almost put the money on a credit card to get the cash cash back and the points and everything if an emergency happened, I would literally apply for a freaking 0% like Promo card that has like the you spend so much money and you get like Seriously you can get like and say you had to replace like a water heater.
It's like $700 put down the credit card get the Furnace like if you have a furnace for like I don't know say $10,000 or something I put that on a credit card you pay then you'll pay it off with your emergency fund anyway so you're not gonna have to worry about the zoo like the interest and you're getting all the per all the all the perks all the benefits of putting $10,000 worth of money on your credit card Potentially a cash back bonus if you open a new card when you do it It's what I would do um but now they're like the one of the other perks of the ladder and stacking system is it gives you more savings you can save more money on everyday expenses and on interest rates because you actually Like if you have seven, you know, seven cards you can just say well This one has an interest rate of 8% and this one has interest rate 12% So you're saving 4% because you have access to multiple lines of credit with whatever interest rates. So you're actually going to save Money compared to if you only have one or two cars No I just had a thought and like don't do this because it might be risky But this is something to think about like if you go for an auto loan if you're one of those people that needs a new car every year you could potentially Do a balance transfer on a 0% like promo code So basically you're paying 4% versus I don't know what the freaking interest rates are on car loans anymore Well, they're usually pretty high That's it. Yeah, they're not too I know some people that are paying like Ridiculously high amounts for both so for those of you who have the really high like freaking auto loan crap and Then that actually you'd be able to potentially even carry less coverage Because of the gap thing wouldn't be there because you wouldn't technically have an auto loan again sketchy sketchy So don't don't do what I'm saying But I'm just saying like you could potentially and then trade your car in a year and not have to worry about the extra fees Or whatever.
Yeah, so like that's one just just saying that's your if your loans more than like the 4% balance transfer Just transfer the money into your bank account pay off your car and then you if you're saving for five or six percent I'm sure probably even more with the freaking lack of gap insurance And the last benefit of the latter and stacking approach is like you're getting just ridiculous amounts of benefits because all those different Cards that you get are going to have different promos different benefits different cash back things So like I don't think the sketchy ones offer you really anything other than extra fun if you use them responsibly They are great reasons like credit can literally be an asset Part of your financial portfolio if you are responsible with them If not, then I would kind of stay away from stay away from it use cash only like if you can't if you are not a responsible credit like user if you just see that as like lottery of winnings and so if you want to see exactly what a Stacking or oh my god ladder looks like Here we here we go. We're gonna pull up pull up. So I helped him pay these off, right? So these are the companies we were talking about blaze is terrible I think he said this one was like super sketchy a legacy credit one tries to act like capital one Say the same look on the card and everything but look at there's not a lot of really high balances So it was just a lot of little ones stacked up stacked up stacked up stacked up.
It was like twenty eight twenty eight Thousand one hundred whatever and then by the time I think he still had like Surge was the one that wouldn't let it pay and I think that one had like twenty one hundred. Yeah, it's twenty one twenty With an annual fee to 25 annual fee $35 late fee. Yeah, I'm just like ridiculous So it's like some of these one two threes indigo's destiny milestones.
So really that's what it looks like back you have all these different cards and Upgrade was one being sketchy too. I think premiere. I think premiere was the one that like rejected a payment Surge was also the one Brightway upgrade.
I mean, these are the ones again if you have no credit I definitely would not recommend most of these but if you guys are interested to know what the some of the smaller early ones are But it's funny these names destiny Banger names like oh, I must have a destiny card and it's like just a shit card Absolutely Absolutely, that's what it looks like. So you see it's just crazy shit. It's crazy.
Absolutely crazy So it's like I got all this posted I did like that one step transfer and the cool part is like his payment I think the minimum payment on the one that was uh What was it? It was 98. Hold on Yeah, so the actual total debt with the fees so you can see here when I pulled it out capital want to discover I did 9,546 on the capital one and the fee was 381 which was a 4% so that put the balance just below the 10,000 and the discover I had like 1,900 1,900 1,400 So we pulled out the cash and that was like a seven hundred forty six dollar fee or whatever But for a processing and the other one was like 15 days They got a mail didn't check but the capital one one What was I gonna say about that one? They had to pay the panel Discover still hasn't yet capital one is sketchy. So discover is actually really nice.
They like it's been a month ish. When did I do this? 819 so it's been over a month and discover still doesn't even actually have like a payment due Capital one literally had their payment due before we even got the check to freaking apply to anything But I will say on that 10,000 or whatever. It is 99 to 28 The $99 is like the minimum payment So I assume the other ones gonna be like double that but that's way more manageable than like whatever the hell else was going on Over here in this crazy.
Like I can't even imagine balancing. How many freaking cards was this? 24 like that's absurd. I can't even imagine balancing that like at all It's probably less than that because I had a couple dip double payments in here because of a Balances and shit and the one like wouldn't let me pay more than so much on it.
Anyway, so that was the looks like Sketchy, it's not well Again, it can be sketchy if you can be if it gets out of hand It does get out of hand but if you keep it under control use it responsibly it can be a beautiful thing that I Everybody should have and now that I know about it Although we'll see how long it takes him to pay off like whatever, but I will definitely be leveraging that for Probably the high yielders at some point on a 4% and then like throwing money back in cuz like why not? If you can churn and build your portfolio a lot faster That's how I'm looking at this Like this is what the wealthy people do they take out freaking loans on their assets and then they invested at a higher interest rate And they make sure it's paid back and they have like backup plans and backup plans and backup plans and they utilize credit to their Advantage, they don't do what normal people do where they spend on Liabilities and then basically robbed from their future with interest You're investing in things that are paying you interest instead of credit cards that are charging you interest So that's that that would be a fun topic to cover. It was very interesting to watch it Juggle, he like he was like fanning him out like playing cards. It was so ridiculous.
I wouldn't do it. Yeah No, definitely not not with a whole bunch of little ones Like if you have what I have where you have like 20 grand on a freaking card availability But not all cards are created equal like Wells Fargo I have like 16,000 credit limit on that one and like they have no zero promo like balance transfers I was like, yeah, we're not using you. No, thank you.
The next week is They just love the last week this past I think Wednesday was Wednesday or Thursday last week. They lowered the interest rates by 0.25 We brought it up during this podcast on next week. I'm actually going to Dig into that deep dive into like what that actually means to like, you know us little people Mm-hmm doesn't mean much how that impacts our investing approach how it impacts like the macros or what visions Tim's got going on So we'll go over that Well, it's basically gonna be like what did it actually means to you like like what it means to you as a as a consumer first and foremost then I'm actually gonna go and then we'll go into like the macro trends and the what it means for the portfolio but Big portion of that's going to be like what it means to think normal people like it's everyone's like, oh, yeah They lower the interest rate.
So like what's it mean? It doesn't mean anything because the credit cards Like I said already have lowered their interest. Yeah, it's all priced on and Auto loans for the most part are they're gonna stay what they are doesn't matter what interest rate is Your savings account might take a dip because they're gonna lower the interest rate But we'll go over all that and it's it's it's quite interesting Why everyone's so like everybody's so excited about interest rates being lowered when it actually doesn't do Jack shit for most people and it's actually a bad thing when it comes to purchasing Like seeing it as bad for like what it's what it signifies is a weak economy. Yep.
Exactly. What do I know? I'm not an expert All right, guys, but we will see you in next week's episode. Hopefully this credit card thing sparks some ideas It's all about you know using the resources you have to get crafty to like get where you want to go, man