Credit Card Debt Explained With a Glass of Water

[HaleHaridwald]

If you can ignore the debt collectors, after seven years in Canada, your debt is erased

[sakemek]

Is it really the interest rate 17% per month?

[FortNikitaBullion]

@sakemek yea it should be per year. The video needs a correction

[6000deepsead]

The road to bankruptcy is paved with plastic.Althou some bankruptcies were due to high medical expenses and downsizing,a great many had to do with credit-card debt.Card issuers encourage their consumers to go into debt with incentives like frequent-flier miles,cash back and low introductry interest rates."We're finding a lot of people are living off their credit cards,and they're even making their credit-card payments with a credit card,"says executive director of CCCS.

[mackat4ck]

I'll never have a credit card!

[ispyonu20]

I have a big debt with this CC... its kinda screwing me up! I need to pay it off ASAP... so I hope like in a year I can be free of debt... xDD

[gondalsb]

The owner of Citibank once said

"the best way to manage a credit card is not having it"

I agree

[anshulkamboj]

thats right

i pay off my credit card, make pyaments up to 1000 up to month

[natenorrish]

Credit was never thought up in order to screw people over... it's the people who are screwing themselves over by not earning enough for the debt they have! If you use credit properly, it's extremely useful.. and the idea is nothing is for free.. the banks have to make some money somewhere along the line... hence the interest! If you can't afford the interest, don't use credit... be patient and save instead.

[orionstarman]

Several years ago I had about $15,000 in CC debt. One day I got in the mail an offer for a new CC with the enticement of 0% interest to rollover any unpaid balance on other CCs. I jumped at it. After a year the interest rate reset up to 9% but low and behold I got another 0% offer from another CC company and jumped on that one. Same deal after 1 year it was about to reset to 9% and you guessed it I got another 0% offer. It took about 3 years but I paid it all off with almost no interest.

[Will224000]

...and they "Loaned" you "Money" that never existed before you borrowed it...

...Banking is the Best Racket !...

...the flip side is that ALL "Money" is brought into circulation as a Debt and if no one borrowed any money there would be less and less in circulation... that leads to Inflation...

[jmweb7]

This is an example of how credit companies will mislead you as in this video they make you believe you are being charged 17% monthly and yet you are only being charged 17% yearly.

#fail

[moneyandsociety]

this is a brilliant video

[AngeloBGC]

The people that "Thumbed up" this video sure no about maths ...

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[agun17]

((10000-(142x12))x(17%))+(1000­0-(142x12))=Debt after 1 year=9706, not 9995.

((9706-(142x12))x(17%))+(9706-­(142x12))=Debt after 2 years=9362, not 9990.

((9362-(142x12))x(17%))+(9362-­(142x12))=Debt after 3 years=8960

It's an exponential funtion. The video used a linear function, thus it's calculations are invalid.

[fatcatbuzz]

@agun17 I figured the calculations to be a little off in the video. However, the point is still there. I would be many years to pay off a credit card if you only pay the minimum payments.

[TheMEK3]

@agun17 Your math is way off! This is simple algebra.

10,000 - 142 = 9,858

9,858 * 17% * 1 / 12 = 140

9,858 + 140 = 9,998

Whatever you did is calculus.

[agun17]

@TheMEK3

This is an exponential function. The first month you will lower your debt by a lower amount than the 12th month thus you can't simply assume the amount by which you've lowered your debt in the first month will be the same for the 12th month. The average monthly amount by which you lower your debt in the first year is $24.5 using the example in this video.

Please understand the difference between an exponential equation and a linear one before attempting to correct me.

[TheMEK3]

@agun17 Okay. But are you aware that if this was an exponential function then we would be working with "e"? There is no "e". Again, this is simple algebra. When you have a credit card and you do charge $10,000 you are suppose to pay if off before the next billing cycle in order to avoid any interest charges. In the example, we only paid the minimum balance of $142 which means that we didn't pay it off in the full month. Maybe you should understand the difference between the two.

[agun17]

@TheMEK3

*facepalm* Not all exponential functions are in base e. Ever heard of exponential growth? No, of course you haven't or you wouldn't have said such ludicrous statement.

[TheMEK3]

@agun17 This is obviously way above your comprehension.  You do you and I'll do me. Fair enough Sitting Bull?

[agun17]

@TheMEK3 You are pathetic.

[Rezxer]

@agun17 This isn't accurate either.

Interest compounds monthly, not annually. Your formula subtracts (142 * 12) from the principal of $10K, then it calculates (0.17) from the resulting principal, which isn't accurate.

After a year of $142 payments and monthly compounding interest, the total principal should be $9,996.06. Yes, only $4 less than the starting principal. 17% APR equals to 0.01416666667% monthly, which is $141.67 monthly interest, so your effectively only paying $0.33 per month.

[Rezxer]

@Rezxer I ran out of space in my previous comment, but one thing about the compounding. Some CCs compound monthly, but it should be noted that many CCs compound *daily*, which makes the problem a lot worse.

[agun17]

@Rezxer

I assumed the contract was 17% interest a year because that's how banks advertise their loans, with yearly interest not monthly interest.

Just shows how banks like to scam you by confusing you. Still, they should advertise monthly interest rates if they are going to charge it monthly. Thanks for pointing that out.

[bibolcs]

that why they get rich and us we get squash (we are the other 99%)

[bibolcs]

lets come back again like grand ma and grand pa, save the money under the mattress.!

[bibolcs]

talking english..! they are ripping ya alive and/or Robbing BLIND..! Sharks.!

[mario02423]

@TheMEK3, the sad thing is that the rate isn't multiplied by 1/12, it's actually multiplied by 1/365 and compounded DAILY. You pay interest on your interest every day it accumulates.

On day one of your $10,000, you're paying (10,000 * .17 * 1/365) = $4.65 in interest.

On day two of your $10,004.65, you're paying (10,004.65 * .17 * 1/365) = $4.66 in interest.

It adds up quickly.

[skuroo]

fake



[FreeTh1nk3r]

Learn to pay cash, or don't spend more than 3,000 on a credit card. Herp derp.

[TWSceptic]

This video demonstrates why CC debt is typical for stupid people.

[EliyasTensai]

@TWSceptic hey excuse me, I am deaf and I can't hear what they said so. To use on CC for those who deaf or hard of hearing people use them to read what a person's speak about this

[Dinyang]

Pay more than your minimum stupids.

[melthompsoniii]

How does credit card debt relief fit into the protests against very uneven wealth distribution in this country .

[sebastianhuang]

this is soo stressfull oh noo!!!!

[adjiesejatie]

let's convert to gold ... the real money, anti-inflation.

[SchachMD]

@adjiesejatie gold - the money of the people :)

[ssmccullough]

So what happens if you pay way more than your minimum payment? I often make $100 payments and am paid off within a few months, minimizing my interest charged. Credit cards are extremely helpful if you use them correctly.

[TruUnderGroundHipHop]

@ssmccullough sometimes if you pay something off within a year there is no interest.

[AnnoyingTypoSyndrome]

Serves you right, you credit card bastards, wiht your nice cars, and fancy clothes !

FUCK YOU, YOU'RE FUCKED !

[exploreryen]

can you pay more?

[pxelcss]

@exploreryen Depends. Sometimes you can and sometimes you cant.

[ThePantha2]

Credit = Slavery

[fishing666]

your minimum payments go down as your owing amount decreases. so you are either paying a variable minimum payment each month or a static amount of $142/month. anyways, interest is just a concept of making money from thin air

[abc987tx]

You must sleep to believe of the American dream.

America back your brain.

[5camperdown68a]

Very good example and demonstration ,and keep up the good work

[notadirector]

Wait a second. I'm pretty sure that 17% is supposed to be APR which means it is the nominal interest per year not per month!! Lying will get you no where.

[x2436ab]

@notadirector

I'll bet you had F- or worse in math!

10000*0,17 = 1700 per year!

1700/12 = 141,66666666666666.......... per month!

Got it?

[FairResources]

Credit cards are known as bank loans. While lending money from a bank doesn't exist, hiring money does. When you hire something, it is known you have to pay back more then you borrowed. They wan't to make as much money as they can, by lowering your the minimal monthly payback. Be smart, pay more then this on monthly basis, or don't take a loan at all, or you'll find yourself in an entangled situation.

[realsc00ter]

That's disgusting

[cgishack]

I recently had to put $2,500 of car repairs on my credit card, and it Canada the CC companies have to inform you how long it would take to pay your bill back if you only make the minimum payments.... My $2,500 bill says it will take 22 years and 9 months to pay off. .. ridiculous!! Pay off you bills people and you will be richer in the end!

[rmcdaniel423]

I say just throw the fucking glass at the bank and run away, screaming "Take that, bitches!!"

[DebtCreditRepayment]

Good Information regarding credit card debt. It is good idea to be have these type of credit card debt system. It would be very beneficial for me.

[KarlieMildraed]

That is a very disturbing demonstration. Thank you.

[kaey69]

He said 17% monthly rate when most cc are 17-20% annual.

[andyO4you]

Just dont pay anything for 2 or 3 years.. call them up : they probably say that debt of 10k went yup to 20+k thats fine... tell them you are going to live in another country and that you have 2000 dollars either that or they get nothing.. they will accept... if they dont accept. Pay those 2000 dollars to a lawyer and go bankrupt you will be debt free and in 5-10 years credit scores will start to go up. Thumbs up if you agree.

[massarde9591]

The world is the way that is because we are ignorant. There is no bad banker or bad governments. What we have is stupid people.

why someone would do something stupid like this?

[thedivekid78]

@massarde9591 no your mistaken.. credit in the wrong hands can do the same to a person who is bad in making good decisions. i have shit loads of credit and cant afford to pay but i get offered credit all the time?? my partner earns more than me and has only one credit card and gets rejected for further credit all the time even though she has never not paid a bill. now u tell me... is this system working. i think not.

[massarde9591]

@thedivekid78

not sure i understand.

Credit card wasn't built to work, was built to take money from stupid people. they make us believe we have to buy what we don't need, and cant be afforded. At the end, we have to work more hard to pay what we didn't need, and pay 2 times more what we couldn't afford. who you think have more valor for Credit card company, who pay everything in 6 months with no interest or who pay the minimum in 10 years? they are not here to help us.

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[mycesi]

very informative. However, the interest rate is 17% yearly, not monthly. And people shouldn't just stop making payments. If you already have debt, it's best to get credit counseling and find out the best option for you.

[marcowebreg]

@mycesi Credit card debt has been deceptively sold as a clever tool for debt enslavement. The CC companies favorite customers are those that can't afford to make regular monthly payments and will get wrapped up on fees forever... legal fees, late fees, missed payment fees, ridiculous interest rates that COMPOUND monthly. Albert Einstein allegedly once declared compound interest to be THE most powerful force in the universe... think that one over. Stop paying all of it. They are crooks

[brunnizzle]

I hate this video hahaha

[harperonline]

I like your explination however are you are basing your calculation on a 17% per month interest, not an annual interest rate of 17%. I fell into the debt trap and used the snowball method to clear my debt - try it.

Keep up the good work.

[harperonline]

@harperonline - Cancel that, it is 17% per year - doh.

This is what happens when one watches you tube videos after not sleeping for 24 hours.

[anshulkamboj]

credit card company sucksss ...blood sucking monsters

[NOMELEMBE]

could you do that for the house

[Tampa0123456789]

Hmm I wonder if the united states is paying the full bill or just the minimum? Does any one know? I am very curious.

[Jo3HoXhA2PaC]

This video explain it this way . YOU BUY A CREDIT CARD , AND NEVER USE IT .

[blazinhomo]

@Jo3HoXhA2PaC you don't "buy" a credit card

[MoltenMozzarella]

all americans should get a credit card to pay off other credit cards and then simply get a credit card to pay off that credit card. if you have trouble getting a credit card to pay off the credit cards just get a loan. if you can't get a loan, go bankrupt and use your credit card to pay a lawyer so you can get a loan later. if later you can't get a loan just use your credit card. if you can't get a credit card or a loan, sale everything and get the hell outta there.

[conman2317]

I have negative debt cuz i never used or never will use a fucking credit card

[a2theizzle08]

Here's something I don't understand, say you use your credit card to make a $500 purchase. When the monthly bill comes can you pay the $500 that you owe at once? If so, will that build good credit? I heard that it doesn't and in order to get good credit you have to owe money... I'm sad.

[blazinhomo]

@a2theizzle08 Uhm, you heard wrong. There's a bunch of bullshit on the web these days. I pay off my balances in FULL every month, and I have a 792 FICO score.

[a2theizzle08]

@blazinhomo I see....Thanks for answering.

[jebenn23]

I don't have credit cards anymore. Tired of paying membership fees, payment protection fees, and interest. I was never late and only carried balances when I was unemployed. Now I am cash only for everything.

[table9876]

Nice demo on how ppl waste money on interest. But I pay 0% on credit card -I pay it off in full on the last day of due holding the my money in mortgage to save interest on that. And of course no annual fee either -why waste.

Thanks to my wife's job, mortgage is on track to be paid off in 9yrs. I use Quicken to track expenses. Key to wealth building is to know how much you spend on items every month and have control- thanks to my dad for teaching these at young age; will do the same for my kids.

[bighousenurse]

Excuse me, I think I have to go throw up...

F*$# credit card companies!

[Mropevargas]

Why wait to cut it up??? Cut them NOW!!

[1nfin1x]

i owe about $1400ish now from 3k making $500-600 payments every 2 weeks once its paid off im cutting it up! :D That thing is evil!!

[DRAGONKINGOFTIBET]

i aint going to take loan in my life. these credit card companies r blood suckers.

[upload]

I owe $3500 right now, how about u guys?

[lamiac2411]

SCAM> See they get you telling you "low interest rates". But then those so called "finance charges" get ya. After all the fees and interest you are in reality paying over 30-40% or more in interest. Thats illegal! But they are experts at getting around it. Those are loan shark rates. Save money to buy what you want. Finance a house. But stay away from these fucking scam cards at all costs. Unless u can pay the full amount every month.

[madamkirk]

Is this an APR example? It is unrealistic for 17% per month. The APR on 17% is about 1.5% interest for each month.

[dj2dj2]

Credit is essential. At some point in your life you'll need to borrow money and that's where credit (credit score/reports) come into play. The key is to manage credit responsibly. This video is true when it comes to minimum payments.

[TheMEK3]

Very good example and demonstration. This is true to the fullest. In case anyone wants to see the math it goes like this...

10,000 - 142 = 9,858

9,858 * .17 * 1 / 12 = 140

9,858 + 140 = 9,998

Real amount paid to credit card company = 10,000 - 9,998 = $2.00

[nofilmneeded]

This video isn't off because if you keep spending on your credit card then the payments will continue.

[FortNikitaBullion]

So just don't pay. Cut up your credit cards and forget it.

[MongooseFreeRider]

I never have had a credit card but i heard they charge so much interest because the money you borrow that the bank is also borrowing that money and paying interest on it as well which you pay for on top of what they would be charging..is that right?

[professorfontana]

Obama is a piece of shit just like his predissesors, you all are ignorant schmucks

[yourmajezty]

this is insane!

[justinshafer817]

I am 30 and dont own a credit card.. they finally stopped sending me the letters too.. I dont understand how you guys like to spend money you dont have.. Cars... House.. I understand.. but....

[eugene680]

I don't have any credit cards, debit cards, checking accounts or interacts. Cash and cash only, that way my spending for a day is only what I have in my wallet. So if I take $20 with me, my limit is $20 and nothing more.

[stevenc323]

@eugene680 are u a hobo?

[eugene680]

No. I'm just not interested in those ways of paying. If I have any of those things, it might tempt me to go on a spending spree.

[Retrofanatic10]

@stevenc323 Probably not the man is smart. He probably paid for an apartment or house cash down. No monthly payments , no interest. If he does , he probably knows how to pay it off without using a credit card. When you own a credit card , you are a slave to the bank.

[ResidentRetro]

@eugene680 I had credit cards, not sure what a checking account is... but now im like you.. £20 in my wallet with the same limit... and it feels good.

[ResidentRetro]

@eugene680 I had credit cards, not sure what a checking account is... but now im like you.. £20 in my wallet with the same limit... and it feels good.

[xXSadJXx]

@eugene680 so what will happen if the things that you need are more the 20$

[Pipipanda1]

@xXSadJXx Then he won't buy it

[eugene680]

Then I bring more money that will cover that cost.

[xXSadJXx]

@eugene680 so you have to borrow wich creates debt

[SchachMD]

@eugene680 So right, dude, so right!!!! I dont understand the motherfuckers who pay with a credit card for something, that costs 12,5$ and paying 18% extra for that. And after that they wonder, why the fuck is there a financial crisis? :D I aks myself, did people fucking lost the last remaints of their minds????????

[eugene680]

That's why cash is better. In fact, at the end after all these cheques and credit. It all comes down to cash. So might as well pay for something with cash and have no interest to pay off.

[stephon44]

As you progress your interest payments will go down because the principle goes down with each payment, so the video is a little off.

[jim6584]

This is crap. The minimum payment is about 2-3% of the total debt. On $10,000 that is a payment of $200 to $300 a month. Not sticking up for the banks because they are crooks but this is a misleading video. Only paying down a $1 of the principle it would take 800+ years to pay it off paying the minimums.

[vacationboyvideos]

just file for bankruspty

[nofatchxplzthx]

this is why credit cards are a bad idea in the first place

[Cerulean0987]

Great video. Quite an eye opener isn't it?

[n1sK]

Interest is usually around the 1.7/8% margin not 17% =P

[tara3870]

I believe most people in debt could pay the principal of what they owe. Most would have no problem with that. The fees as you all know is what gets everyone in trouble. Credit card companies and banks are not your friend. I recently closed my Citibank account when I had changed banks (credit union) and realized they were charging me $12 a month for not having money in the acct. Did they tell me this? No, I just happened to run across it and realized I owed them a big chunk of money.

[walrus417]

Although the premise is good, the assumptions are a bit off. Generally, Credit Card companies structure their minimum payments to pay off the balance in 20 years or so. So instead of $142 a month, it should be more like $175.

One thing you did not mention is that this also assumes that you stop buying stuff with your credit card. If you buy $100 worth of stuff a year, you will never pay off your debt

[Chase69Chase]

Overall, nice presentation, but why was the debt dropping $1 per month at first, then slows to $5 per year? That skews the numbers higher, but the debt is still catastrophic.

[snivesz32]

Good Illustration. I don't think debtors dispute this knowledge, rather they fall victim to the psychological trap of deferred pain. Paying $20 for something at a later time seems less painful than paying $10 for it today. The problem is compounded when they don't have the $10 in the first place.