"Americans Are Getting RIPPED OFF!" - Trump Vows To DESTROY Credit Cards

0:00 Welcome back to the Graham Stefen Show and we have to address this.

0:03 Credit card balances are rising, delinquencies are increasing,

0:06 and with the cost of everyday items now just getting to an absurd amount,

0:09 that brings us to today where Trump now

0:12 wants to cap credit card interest rates at 10%.

0:15 This means there's going to be a huge

0:17 impact across the entire credit card industry,

0:19 which is why I want to comment on this video from Value

0:22 Tainment as soon as you hit the like button and subscribe,

0:24 because believe it or not,

0:26 there are going to be some serious implications for everyone watching.

0:29 and it's especially going to impact people

0:31 unfortunately who are good with their credit cards.

0:34 So, with that said, hit the like button, subscribe.

0:36 Also, big thank you to Cook Unity for sponsoring this video.

0:39 But more on that later.

0:40 Let's begin.

0:41 Trump floats one year 10% credit card interest rate cap.

0:46 What that could mean for your money.

0:48 No, I want a cap on credit card interest rates because,

0:53 you know, some of them are 28 almost 30%.

0:56 And that people don't know they're paying 30%.

0:59 No way.

1:00 We're putting a one-year cap at 10%.

1:03 And that's it.

1:03 They know it.

1:04 They really They've really abused the public.

1:06 The credit card companies have totally abused.

1:09 I'm not going to let it happen.

1:10 Here's the thing, though.

1:11 Objectively, Trump does not have the power on his own

1:14 to force credit card companies to lower interest rates down to 10%.

1:17 He could call on whatever he wants.

1:20 He could call and say,

1:20 "Credit card companies shouldn't even be charging interest.

1:23 They should be doing it for free." But you know what?

1:26 Calling for something,

1:27 it's not the same thing as going through Congress, getting something passed.

1:30 And even though there's a lot of bipartisan support,

1:34 the reality is, okay, I I hate to say it.

1:36 I I I'm the bearer of bad news here.

1:39 You can't have credit cards charging you 10% for unsecured debts.

1:44 Just the math ain't math.

1:45 And it doesn't work like that.

1:47 You can't go and just hand someone money and demand 10%

1:50 with nothing in return beyond someone's word that they'll pay it back.

1:55 It just doesn't work like that.

1:56 So, in reality, no, I don't think this is possible.

1:59 But let's continue because if it did go into effect,

2:03 it is wild the outcome that's going to happen from this.

2:06 61% of credit card holders with credit card balance

2:09 have been in debt for at least one year, up from 53% late 2024.

2:14 According to bank rate survey,

2:16 the average credit card interest rate in the US fell to 23.79% in January,

2:21 marking the lowest level since March of 2023.

2:25 Mark, I'll come to you first.

2:26 Thoughts on the story?

2:27 Thoughts on the story?

2:28 It's just a lack of financial literacy, first of all,

2:30 because most people are completely oblivious

2:32 to what their credit card balance is.

2:34 They have no idea how much they pay in interest.

2:36 All they do is they go and charge the card, make the minimum balance,

2:39 and think they're all hunky dory, where behind the scenes, it's a dumpster fire.

2:44 Ideally, credit cards should be used only putting expenses on the card,

2:48 getting the cash back, getting the points, getting the rewards,

2:51 and then paying it off in full by the time it's due.

2:55 You should never have to pay any interest

2:56 on a credit card ever if you do this correctly.

2:59 And if you do have to pay interest,

3:01 it should just be for an emergency only where you need to spend the money,

3:06 not because you want to go to Coachella and just have a great time.

3:09 So, I think it really comes down to most

3:11 people just aren't aware of what they're doing.

3:13 And the people that are, you know what, unfortunately,

3:16 it's just they're digging themselves uh you know, a financial grave.

3:19 We have inflation that's raging.

3:21 People can't afford to live.

3:22 And at the end, what the leaders always try

3:24 to do is try to appease the people by price fixing.

3:27 So whether that's rent controls,

3:29 Elizabeth Warren wants to cap the price of turkeys for Thanksgiving,

3:32 or it's credit card rates.

3:33 The problem with price controls is we have a thousand cases of it not working.

3:38 And just philos from from philosophical level you can understand why.

3:41 So for example, credit cards, banks is a very competitive industry.

3:45 Yeah.

3:45 Look at rent control.

3:46 All they did is they locked in the people

3:47 who were lucky enough to rent a few decades ago.

3:51 And when their rent is only increased

3:53 a few percent based on prices in the 1980s, of course, they love it.

3:58 New people get in and they think, "Oh, well, you know, my uncle Jim,

4:02 he's been paying at his place 900 bucks a month

4:05 right by the beach thanks to rent control." But meanwhile,

4:08 a new ones $5,000 a month.

4:10 And they think, "Oh, well, if if rent control were stronger,

4:13 I'd be able to rent a a place by the beach,

4:16 too, for 800." No, it doesn't work like that.

4:18 It just makes the value of everything else go up.

4:20 And when you try to implement price controls

4:21 and you try to restrict the free market,

4:24 you just get these wild distortions where certain people benefit

4:28 and other people end up paying for the people that benefit.

4:31 That's just how it works.

4:32 So in this event, if credit cards were to put a cap at 10%, guess what?

4:37 Every single risky borrower automatically gets canned.

4:41 They demand payoff notices.

4:43 They're not going to let some schmo open up a credit card who

4:46 doesn't have any credit history or or maybe missed a late payment once.

4:50 Half the people in the world would just never get a credit card.

4:53 It's already competitive.

4:55 Credit card companies are already competing

4:56 to bring the rates as low as possible.

4:57 And what happens is if you cut the rate to 10% or 8% or 18%,

5:01 whatever that number is,

5:02 everybody that wouldn't qualify for that rate is then left without credit.

5:06 He is completely correct and that's what a lot of people don't understand.

5:09 It's popular right now to throw out these ludicrous

5:13 ideas that in the real world never work,

5:16 but they sound great.

5:18 It's like telling everybody, "Hey guys, you know, if I'm president,

5:22 I'm going to make sure every car you could buy for $10,000.

5:27 That's it.

5:28 No car should cost more than $10,000." And that Lamborghini you want,

5:31 yeah, that should also only be $10,000.

5:34 And people sit there and they're, "Oh, whoa, that's awesome.

5:37 I want a Lambo for $10,000." It doesn't work like that.

5:40 But you know what?

5:41 It gets votes.

5:42 It gets attention.

5:43 People like it.

5:44 And I've started to realize there's a big difference between like

5:48 what's real and what'll actually work and versus just what's popular.

5:52 And and people prefer between the two.

5:54 We have we have like the real solution

5:56 here and then the popular sounding version here.

5:59 Everyone goes for the popular sounding version.

6:01 Like look at the built credit card.

6:02 and they were losing so much money because they

6:04 were offering so much of a reward that people started

6:07 to game the system and get one up on it

6:10 and they just couldn't float that sort of reward anymore.

6:12 So they had to pivot.

6:14 So that that's what happens when you allow

6:15 free market to do your thing is that sometimes

6:18 they just wind up losing a lot of money

6:19 because people find how to take advantage of them.

6:22 late 2021, early 2022,

6:24 credit card companies reduced um people's credit limits across the board because

6:30 the economy was tough and so they were handicapping the fact that you know

6:35 a lot of people are probably going to go for cash advances because

6:38 money was tight but they were going to have issues paying it back.

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8:43 Now, let's get back to the video.

8:44 So, that wasn't the government telling them.

8:46 That was all of us in the boardroom of Visa saying, "Hey,

8:50 the lowest third is starting to take a lot of cash advances, guys.

8:54 Should we lower I mean, these people have a $25,000 limit.

8:58 Should we lower it to 20?

8:59 Just send out the notice.

9:00 Lower it right now."

9:02 Yes, let's do it.

9:03 Here's another data point, too.

9:04 In 2020, I had something like 12 credit cards.

9:07 An absurd amount.

9:08 I would basically just open up credit cards,

9:10 get the sign up bonus, and then never use the credit card again.

9:13 So, I had all these cards that I just forgot to use.

9:16 I just don't use them.

9:17 Okay.

9:17 But what a lot of credit cards started to do is cancel

9:20 the unused credit cards because on their end it was just seen as risk.

9:23 It was like showing, okay,

9:24 we have a hund00 million of revolving credit out there and so

9:28 our liability theoretically is $100 million if

9:32 everyone just maxed out their card overnight.

9:34 So instead of taking on $und00 million of risk,

9:37 we're going to cut anyone who hasn't used their card in the last

9:39 two years and uh they're no longer going to have access to that anymore.

9:43 That's what happened to me.

9:44 I had a few credit cards just cancel because I forgot to use them.

9:47 And so for the credit card companies,

9:48 they take the risk from hundred million down to $60 million.

9:51 That's great.

9:52 Now, their worst case scenario is a lot less.

9:54 You know, people like me that just open up the credit card for nothing.

9:57 Like, I don't care.

9:58 But imagine someone who opened up a credit

10:00 card years ago for like a financial emergency,

10:02 never used it because they've been so diligent,

10:05 but then they have their credit card canled because they never used it.

10:07 That that's the reality of what happens in situations like that.

10:10 The credit card companies are competing with each other.

10:12 What's going to happen if you put the cap?

10:15 It's just like COVID.

10:16 They're going to lower the limits and people

10:19 are going to turn to BNPL or other things.

10:22 If one of them could get more customers by going to 19.99%,

10:27 you'd see one of them do it tomorrow morning.

10:29 Here's the thing that you have to think about, too.

10:31 Okay?

10:31 The reason credit card interest rates are so high is because

10:35 a small subset of the population opens up the credit cards.

10:39 They rack up a whole bunch of debt and they never pay it off.

10:42 And then what do the credit cards do?

10:44 They sell that debt to a third party for pennies on the dollar.

10:48 So if someone owes $50,000,

10:51 that might only be worth $500 on the secondary market to a debt collector.

10:56 And so after a certain amount of time, they sell them off to debt collectors.

10:59 They take the hit.

11:00 But everyone else who pays their bill sees

11:03 a higher interest rate because it's blended together.

11:06 The people who pay their bill offset the people who

11:08 don't pay their bill and then send it to collections.

11:11 If if we could all collectively agree, hey,

11:14 we're going to pay the minimum credit card balance every single month.

11:17 We're never going to fall behind and we're always going to pay what we owe.

11:21 Interest rates could come down substantially if we

11:24 all just did that at a bare minimum.

11:26 No one would be paying 28% interest rate.

11:28 But what happens?

11:29 The people who don't pay get subsidized by the people who do.

11:32 Also, I'm just going to be fair here and call myself out, too.

11:35 The people who get a lot of credit card rewards and pay

11:37 no interest are also subsidized by the people who carry a balance.

11:41 Okay?

11:41 So, for full transparency,

11:43 the best way to beat the system, don't carry a balance.

11:46 And if you need to carry a balance, ideally, just don't don't get a credit card.

11:50 If it really comes to that, unless it's a worst case emergency,

11:53 never carry a credit card balance ever.

11:55 just thinking it's as if they're sitting in a room saying,

11:57 "All right, this cost of living thing is becoming a problem.

12:00 Everybody's still talking about it." Um, what's a bone that we could throw

12:02 at the public and um appease them a little bit,

12:04 make them feel like we're doing something.

12:05 And it's just a popular talking point.

12:07 That's all it is.

12:08 It means nothing.

12:10 It means nothing.

12:11 And I don't think it's ever going to go into effect.

12:13 And if it did, okay, if it did, it's going to be something like 18 to 22%.

12:18 The credit card industry cannot survive with an interest rate of 10%.

12:22 It just can't because of how many people go

12:24 and charge up the card, don't pay it back.

12:26 For a socialist/communist to agree with a capitalist conservative on the 10%,

12:32 this is where the independent in the middle will look at this and say,

12:35 "Well, if both of these guys are on it, I'm willing to entertain it."

12:39 No, it's just dumb.

12:40 It just doesn't work.

12:41 [snorts] It sounds nice.

12:42 It just doesn't work at all.

12:45 And I hate getting involved in politics.

12:47 Really, I don't care.

12:48 I don't care at all.

12:50 It just seems like, hey,

12:51 this is grease in the wheel for, you know, midterm elections.

12:55 Uh, let's say what what people want to hear.

12:58 We're just going to try to swoop people off their feet and, uh, we win.

13:01 That that's to me what this comes off as.

13:04 So, if you lower it to 10%.

13:06 The banks are going to sit there and say,

13:07 "Our profits got hit." And then they lend less.

13:11 If they lend less, the [clears throat] small business owner takes a hit.

13:15 Cuz who will they always lend to?

13:17 They're always going to lend to the guy that doesn't need money.

13:20 They're how much you need?

13:21 $100 million, 50 years a take it.

13:23 Take it.

13:24 Whatever you want, right?

13:25 Because they know that guy's going to pay the money back.

13:27 It's so true.

13:28 By the way, the offers that I get to borrow money are insane right now.

13:33 Insane.

13:34 I'm talking I'm getting offers, by the way,

13:36 to borrow uh floating interest rate, by the way, at 4.45%.

13:44 4.45%.

13:45 So, I could go and buy a house right now and pay interest only 4.45%.

13:51 Or I could take advantage of what's called a box spread

13:54 on my investment portfolio and borrow closer to 4% fixed for 2 years.

14:01 Very true though.

14:02 The more you need the money,

14:03 the higher the interest rate because the people who need the money

14:06 usually don't have as many means to pay the money back.

14:09 Net profits for Visa is 47 to 52%.

14:14 Mastercard is 45%.

14:16 Amex is 14 to 20%.

14:18 So to me, are you flipping kidding me?

14:22 Yeah, they they're printing money like every single year.

14:24 I remember I bought Visa stock like 10 years

14:26 ago and all you had to do was keep it.

14:29 Here's the thing though, in fairness, having high profit margins is not illegal

14:33 and it's not something that should be taken

14:35 into consideration as far as like what controls

14:39 someone should be able to put on something.

14:40 It's not as though you could say, well, you know,

14:42 he has 80% profit margins and therefore it should

14:44 be less because no one should have 80% profit margins.

14:47 That's dead.

14:48 We need to take that out of the equation and look at like,

14:51 do they have a monopoly in the business?

14:54 Are there effective ways that competitors could get in business?

14:58 Is this a, you know, a healthy ecosystem?

15:01 Things like this, not necessarily the profit margins.

15:03 Do you think this is a net net good thing for low middle inome families?

15:08 Does the product market need scrutiny?

15:10 [clears throat] Yes.

15:12 Does it need to maybe tighten some things up,

15:15 plain talk, disclosures and things like that?

15:18 Sure, it can always benefit.

15:20 Does it need the government to put a cap on how much profit it can make?

15:25 No.

15:25 Yes, I agree with that completely.

15:27 And if uh if anyone is listening, here's my suggestion.

15:31 To be able to go and apply for a credit card,

15:33 I think people should take a basic test.

15:36 uh and and if you fail the test, you don't get access to the credit card.

15:40 And the test should be talking about credit limits, what the interest rates are,

15:45 whether or not you pay interest on a credit card,

15:47 carrying a balance, things like that, basic stuff that you

15:51 and I should be able to know that most people don't.

15:54 And if you if you fail the test, you don't get the credit card.

15:57 But if you pass the test and you understand the implications

16:01 that getting a credit card will have on your life, debt,

16:05 paying it back, all these things, then you get the credit card and you are

16:08 an adult and you can make your own decisions.

16:09 And if you want to pay interest, by all means,

16:12 but I think there needs to be just some sort of qualification, so to speak,

16:16 to make sure you're uh of sound mind and have the basic

16:21 level of knowledge to be able to use a credit card responsibly.

16:24 Even just have them watch like a Dave Ramsey video.

16:27 Just a five minute video before you get approved

16:29 for the credit card and then you click saw this video.

16:32 Great video.

16:33 I hit the like button.

16:34 I subscribed.

16:35 There you go.

16:36 And now you get the credit card.

16:38 But you know what you're walking into.

16:39 Same thing, you know, with with cigarettes.

16:41 They they put the horrible images on the pack

16:43 of the cigarettes so you know what you're doing.

16:45 With alcohol, a whole bunch of warnings on it.

16:47 Put the warnings on a credit card, too.

16:49 Let people understand what they're getting into.

16:51 Print it on the card.

16:52 Are you sure you need to buy this?

16:54 You really you want to buy this thing?

16:56 All right, there you go.

16:57 Done.

16:58 What is the biggest crypto credit card?

17:00 Is there a Bitcoin?

17:01 Is there anything like that right now where it's

17:04 a a a competitor of what a Visa and a Mastercard would be?

17:07 The Gemini credit card.

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17:49 So, overall, here's what I have to say.

17:51 Realistically, the 10% it's a popular talking point.

17:53 That's all it is.

17:54 It's not going to happen.

17:55 Don't waste your time thinking about it.

17:56 If it did, it would devastate the entire credit market.

18:00 Credit cards would scale back on the borrowers

18:02 who they're worried about not paying back their debt

18:04 because a portion of the people at the very

18:06 bottom uh basically just charge off their balances.

18:09 Uh it goes to collections agencies.

18:10 credit cards never see that and uh it's bad.

18:14 So, a lot of people are going to be cut, but realistically, again,

18:17 I I think we're going to see all of these wild

18:20 points over the next few months purely just to gain talking points,

18:24 purely just to gain a little popularity, win in the uh midterm elections,

18:28 and and that's that's the goal of this, okay?

18:31 I don't see it actually going into effect,

18:33 but it is something interesting to think about.

18:35 But let me know what you think down below in the comment section.

18:37 Again, I do my best to read as many comments as possible.

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18:46 Enjoy them.

18:47 And uh until next