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The credit card crisis - Video học tiếng Anh
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The credit card crisis
The credit card crisis
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Sous-titres (269)
0:00
When you think about America's
0:01
financial capital, you're
0:02
probably picturing New York
0:03
City, Chicago, maybe San
0:05
Francisco, not South Dakota or
0:08
Delaware.
0:09
But when it comes to credit
0:10
cards, that's exactly where the
0:12
power is.
0:13
And the reason why has everything to do with the
0:16
interest rates you pay.
0:17
And those rates right now...
0:19
Are at historic highs.
0:20
And there's growing concern more
0:21
and more people will fall into
0:22
debt.
0:23
Average APR for a credit card is now over nineteen percent.
0:27
An economic perfect storm.
0:29
Altogether, Americans now carry more than a trillion dollars in
0:32
credit card debt.
0:33
Take a second to just let that number sink in.
0:36
In twenty twenty four, about
0:37
eight in ten Americans had at
0:39
least one credit card, and we
0:40
used them for virtually
0:42
everything.
0:42
Millions of Americans are using credit cards just to stay alive.
0:46
So we're talking about medical bills, car repairs, home
0:49
repairs, day to day expenses, things like gas and groceries.
0:52
So how did we get here and why do these interest rates keep
0:55
climbing higher and higher?
0:57
And maybe more importantly, why
0:59
have credit cards become so
1:01
central to how we pay for
1:02
everyday life.
1:06
The modern idea of using credit to make a purchase goes back to
1:08
the nineteen fifties.
1:10
Department stores, car dealers, and more were already letting
1:13
customers buy now and pay later.
1:15
At first it was simple: charge
1:16
plates or small tokens tied to a
1:18
single store.
1:19
Then in the nineteen fifties, that idea scaled.
1:22
Credit cards as we know them started in the nineteen fifties
1:25
as a restaurant payment method, basically kind of an IOU.
1:29
And then pretty quickly evolved
1:30
into being used much more
1:32
widely.
1:33
Legend has it a businessman
1:35
named Frank McNamara was out to
1:36
dinner in New York, and he
1:38
realized he had forgotten his
1:39
wallet.
1:40
Embarrassed, he had to call his wife to come pay for the bill.
1:43
But that moment sparked an idea
1:45
a card you could carry so you
1:46
never had to worry about cash
1:48
again.
1:48
That idea became Diners' Club, one of the first charge cards,
1:51
which you paid off every month.
1:53
Then banks took it a step further.
1:55
In nineteen fifty eight, Bank of
1:56
America launched Bankamericard,
1:58
which would eventually become
2:00
VISA.
2:00
Bankamericard.
2:02
Think of it as money.
2:04
Unlike Diners' Club cards, this let you carry a balance month to
2:07
month, and that's where interest enters the picture.
2:09
At first, those rates were tied
2:11
to where you lived, but that all
2:12
changed in nineteen seventy
2:13
eight.
2:14
Speaking of money, this video is presented by Klarna.
2:17
Klarna is an app designed to make everyday spending simpler
2:20
and more transparent.
2:21
It gives you the flexibility to
2:22
decide how you want to pay,
2:24
whether that's right now, later,
2:26
or spreading payments out over
2:27
time.
2:28
Everything is managed within the
2:29
Klarna app, so you can stay
2:30
organized.
2:31
You can also discover deals when
2:33
you shop through Klarna app with
2:34
participating brands.
2:35
Klarna says they're all about flexibility and staying in
2:38
control of how and when you pay.
2:41
Download the Klarna app today or
2:42
go to Klarna dot com to learn
2:44
more.
2:44
Terms apply.
2:45
And a quick note, Klarna didn't
2:47
dictate the editorial content of
2:48
this video, but their support
2:49
did make reporting like this
2:50
possible.
2:51
And now back to the video.
2:54
There was a Supreme Court case back in the seventies that
2:56
declared that it's where the bank is based, not the customer.
2:59
With respect to these state usury laws.
3:02
There's a lot of legalese and laws that happen in between, but
3:05
what you need to know is that this Supreme Court case
3:07
transformed the credit card industry, so that incentivized
3:10
banks to set up shop in places like Delaware, South Dakota,
3:14
Utah, places that either don't have an interest rate cap or
3:18
have a very high cap.
3:20
This helped make credit cards a
3:21
key profit source for banks, and
3:23
their popularity grew pretty
3:24
quickly.
3:25
By nineteen ninety nine, there
3:26
were more than three hundred and
3:27
sixty five million open credit
3:29
accounts in the US, and since
3:31
then, credit card usage has
3:32
skyrocketed and so have interest
3:35
rates.
3:35
Back in twenty ten, it was around ten percent.
3:38
Now we're looking at almost double that for the average.
3:42
These days, the average American
3:43
carries around six thousand
3:45
dollars of credit card debt, and
3:46
more people than ever are
3:48
charging not just for
3:49
convenience.
3:50
Here's a pretty common example
3:51
of how debt can pile up pretty
3:53
fast.
3:54
Say your car breaks down.
3:55
You don't have the extra cash to pay for it, so you put the
3:58
repair on your card.
3:59
You plan to pay it off.
4:00
But life happens and you keep paying just the minimum payment
4:04
because it's all you can afford.
4:06
Seems reasonable.
4:07
After all, that's what credit cards are for.
4:09
If you have five thousand dollars in credit card debt and
4:11
you make minimum payments at twenty or twenty five percent.
4:14
I mean, you could easily be in debt for a decade or more.
4:17
Think about it as walking up the down escalator.
4:20
Each step you take, that's your minimum payment.
4:22
But the escalator is pulling you down at the same time.
4:25
So even though you're moving, you're barely getting anywhere.
4:28
And the longer you do that, the faster the escalator gets and
4:32
the further away you get from climbing your way out of debt.
4:35
As long as you're paying the minimum, you're behaving in
4:37
terms of fulfilling your obligations to the credit card
4:41
company, but you are becoming more and more indebted.
4:44
And that's what then makes it
4:45
very, very difficult to crawl
4:49
out of.
4:49
And that is by design.
4:51
Credit card companies are not charities.
4:55
They are trying to make a profit.
4:58
About half of cardholders pay in full every month.
5:01
The other half that carries expensive debt.
5:03
That's a real trap that some people fall into.
5:06
In twenty twenty two, major
5:07
banks collected one hundred and
5:08
five billion dollars worth of
5:10
interest payments.
5:11
And that interest is based on something called April.
5:14
With April, we're talking about annual percentage rate.
5:16
Basically the interest rate that
5:18
you're charged Apr is based in
5:20
part on the current prime rate,
5:21
which is influenced by the
5:23
Federal Reserve and currently
5:24
sits at six point seven five
5:25
percent.
5:26
So why is your credit card Apr still nearly twenty percent?
5:29
It's because April isn't just one number.
5:31
It's the prime rate plus a big margin on top.
5:34
We have to remember that those credit card companies are trying
5:38
to make a profit.
5:40
A credit card is a loan.
5:42
It's not backed by an underlying home or car.
5:44
There's no underlying asset on the line for repossession.
5:48
They are covering themselves for
5:50
the risk of the credit card
5:52
holder.
5:52
But the risk has also increased
5:54
as more and more Americans find
5:56
themselves living paycheck to
5:57
paycheck.
5:57
It's often because wages have not kept up with inflation, and
6:02
because health care costs in this in this country are so, so
6:07
significant, credit card holders are not using their credit cards
6:12
just because they're in the mood to, to buy a luxury item.
6:15
And it's this question of affordability that has some
6:18
politicians on both sides of the aisle bringing up the idea of
6:21
capping these interest rates.
6:23
I'm asking Congress to cap credit card interest rates at
6:27
ten percent for one year.
6:29
That is the kind of big
6:30
structural change that will make
6:32
a big difference to families
6:34
across America.
6:35
The idea that you don't charge
6:36
outrageous interest rates, not a
6:37
radical idea.
6:38
The idea sounds simple.
6:39
Limit how much banks can charge and make borrowing cheaper.
6:43
Supporters say that could save
6:44
Americans billions of dollars in
6:46
interest.
6:47
But the banks are saying something different.
6:49
It would be a economic disaster.
6:51
There are some kind of doomsday
6:52
scenarios about what would
6:54
happen next.
6:55
You really run the risk that credit card companies then we'll
7:00
say, okay, I'm going to put a cap on how much you, John and
7:05
Mary can charge on your credit card, or they could turn you
7:08
away because they think you're too much risk.
7:11
If they say that more than eighty percent of cardholders
7:14
could lose access to credit, they say that this would really
7:17
dramatically reshape the way we pay for things.
7:20
Could cause a recession if people have less spending power.
7:23
Despite the bipartisan support, a federal interest rate cap is
7:26
unlikely to come anytime soon.
7:28
But that doesn't mean that the
7:29
millions of Americans drowning
7:31
in credit card debt can't take
7:32
action.
7:32
Here's what the experts I spoke to recommend.
7:35
The best way to use a credit
7:36
card is to pay it off as quickly
7:38
as possible.
7:39
You need to be paying down the credit card that has the highest
7:43
rate, because that is what's getting you into even more debt.
7:48
If you need more time, get a
7:50
zero percent balance transfer
7:51
card.
7:52
So that involves opening up a new card, one with a generous
7:55
zero percent promotion.
7:56
So they say.
7:57
Bring your existing credit card debt over to us.
7:59
We won't charge interest for two years.
8:02
Now, they're not doing this out of the goodness of their heart.
8:04
Frankly, they're hoping that you
8:05
carry a balance after the term
8:07
is up, but you can use it to
8:09
your advantage.
8:10
Experts say people also really need to be careful about the
8:13
marketing of credit cards.
8:14
Cash back airline miles, points
8:16
for travel and dining are all
8:18
ways companies try to lure
8:19
people into opening new
8:21
accounts.
8:21
Are you ever really going to use those points?
8:24
Is it going to take millions of
8:25
points for you to get what the
8:27
credit card claims it’s
8:28
offering?
8:29
Credit cards aren't going anywhere.
8:30
Used one way, they're convenient, used another.
8:33
It could be one of the most
8:34
expensive loans you've ever
8:35
taken out.
8:36
Can you think of what can politicians do?
8:38
It's not just about the credit cards.
8:39
It's about much, much bigger problems that really can raise
8:44
the standard of living for everybody who is living here,
8:47
not just for us.
8:49
You know, a few.
