Psychology of Money at Credit Card Use abused by banks and misguide us
today i am going to talk to you on uh about the psychology of our money use especially in regard into credit cards and then the same psychology how banks are going to abuse for their benefit the same psychology is going to damage us and but the same psychology the world bank use is going to improve them so that is what i am going to talk to today so you can see here i am going to use a graft that is my own one from 2015 to 2000 this up to today 2021 february you can see this graph it has various use and use this in this columns and the payment is going as a line diagram line this line so you see some pieces here they are the pieces of mine credit cards so what happened i got to know around 2015 these credit cards people were telling their credit and it's worth to have a credit because it's in addition to our income credit is that uh it's a lubricant-like thing and when you use it it's it's going to improve faster you're going to develop faster your money status is going to look fast those are myths those are myths that is i understood so i am going to tell you about that so credit card is going to take us into a pit or falling down it's not a money advantage it's not investment some people tell when there is a credit card you use the credit card whatever the money you have you can invest so by analyzing now i know it is a myth by investment no one can get more than eight percent which is very sophisticated and if it is very high return rate of return very high in investment that won't last long investments last long this is not predictable that when it is low probably it can last long so it is gambling it's totally gambling of investment is totally gambling we don't know in the future we predict future it will highlight that we think predict the future is true truly happen it's can predict but it is not so the that's what i used to credit but i understood this should not be so somewhere here around 2015 i had this credit card and that i wanted to pay so i pay off and i call the bank pay off a little payoff uh significant person and call the bank and ask them to reduce the my limit usually it is not a call they are expecting usually they are expecting calls that increase the credit limit but i call them decrease my credit limit to significantly lower level and they ask me why i said do i have some other credit card i don't want these credit limits i i i want to reduce it so they agreed and reduce and later once i pay off that limit also then i i'll call them again this call is they didn't expect that to these people i call again they're very talking very kindly they are well trained people to get somebody customers into trap i should use that were trapped and they said you are using this credit card from 2008 2009 so now you have built up a good credit history on that you build up your credit score is very highly depend on this credit card so why you are going to stop that your credit is very important so i trap i trapped him all my endures to raid the paid off and stop the credit card i trapped that i tried to that they have they are trained to objection handling their train because the my type of cause may get from thousands of people so they are trained this this is a common thing so that is going to reduce the income of the bank at least trivially the the trivial ones are the one that is accumulate and giving them a big profit of billions so trivial ones are important for for that their income is reducing his heart is increased their income not my credit history i couldn't understand that so i thought yeah maybe these people are experienced people may be telling truth so i i said okay then i will wait then what happen they gradually increase my credit limits again i accept all of them i accept all of them they reduce the interest rate also i accept all of them i accept so what happened then when they increase my credit limit my that my previous determination and my psychology of paying credit went away it has faded away it destroyed my determination so this is what happened the use use of that credit card increase but i didn't pay you can see whenever they ask me to use the credit card whenever possible and paid off that's what they are telling they they just tell paid off they know millions of people's behavior is not that millions of people's behavior is not that whenever the psychologist has understood when we pay for somebody it is giving the brain centers as pain sensitive areas if you they have the name mri studies functional mri study that pain areas are going to stimulate when somebody pay others so that is payment payment when it is the we use cash it is more increase payment increase pain centers pain more so we don't like pain we don't like pain so what happened is we don't pay it we don't pay much but the we cannot change our consumption we we the our balance accumulate all we whenever we don't pay and the bill is that much and the gap is going to balance to again but they never ask us to pay all they just say you have all whole amount is this but they always want us to pay the minimum at least the the people those who are pay minimum are the best people for them i will show you that when i was paying medium may just be above minimum usually and they increase the credit limit when i am using the credit card and i am not paying the minimum they are the best people for the bank when i pay the only minimum and above that are the best people for the bank so they increase in thousands my credit limit so why use that they monitor this fellow is a good customer he trapped the credit limit increase followed by these fellows balance also so i use more i use more i use more here and this is what's happened and then the uh the this is higher payment you see this is very high use but it is not that what the bank expect what i was doing is i i had this one which is at 22 interest this one is the this one it's 10 to 12 interest so the huge gap 10 percent gap so what i use is take this one money this one's money to pay this one that's why the use is high not that i consume i didn't consume i didn't consume i transfer on average when we take as a whole i really reduce my payments i really will reduce my payment although you see the payments low but the payment for this one is very high if you see the graph for the this credit card it's really high so and then it goes on like that but these people these people get accumulation accumulated balance so i use this one and then here also again there's a huge credit limit increase so i use that also so now the balance is up for them so they are benefited they are benefited so this is how my psychology works the way the balance is high i cannot pay it from my salary my seller is then i have cannot spend anything but they give us a chance to pay minimum but the balance is going to pay in the future that's my psychology that's the person's psychology that's the average person the pain payment is a pain so they try to avoid that pain though they avoid the pain by paying the minimum and then that's how and this is again the high use is here that's that's the some credit limit increase and then there's a high users you can see here because i used to pay my mobile phone and most of the groceries and all from this credit card hoping once i get the bill i will pay but you can see it is not you can see this line diagram is not going like that so then again my balance increase so later here again there is some increase this time is good you can see three lines going i paid this one fully i paid this one fully probably i had some big amounts some maybe 10 or 15 i can't remember um these four i but i had to call them i called them took my phone and called them i thought they are going to say i can reduce their interest no no they use the different strategy here it's not the reward that they didn't show me earlier these people they show the rewards for me to give the pleasure give me a pleasure and may change the vision these people when i call no they use intimidation they ask directly why you are using cancelling i said i have some authorities so why you are cancelling this particular credit card i is it is it increase interest rates that they know is it increase increase interest rate than the other credit cards they ask me they know they are 23 22 others have 10 12 percent so then they asked directly you understand if you you if you want the need the credit card you have to apply from the beginning we may not give the same interest may be higher interest it may not the same credit limit is maybe very low credit limit we may even refuse to give you a credit credit card you have to start from the beginning you know that and they use intimidation and then they call and they said uh you you have advantages of having this credit card just keep with that credit card and if you have some extraordinary expenses unfortunate expenses you can use this credit card why do you just leave it i said no you you cancelled the credit card i told them so they cancelled the trading card so by that way then so this is a balance increase in this one but it is at 10 12 now because it is prime plus 9.5 percent prime plus 9.5 is the agreement so that one happened remote so that is big removal of the 20 to 23 percent interest paying credit card because at a higher level it was almost the credit cam it read removed and it's real from my head and then this is another credit card i have to tell you it it was there with me somewhere from 2017 this is i wanted to gets a line of credit from a bank uh to ex some expenses and six thousand something and that that i had no i cannot get that much money so i use the line of line of data requested that is what has some nine percent interest per year for they have to we have to pay it within uh five years i think and then what they did is a different thing but this is different psychology when when i you they always pay me they that loan really it is an online rental loan that loan installment they put into the credit card i don't want to pay that installment to the bank account loan account is there but not to loan account i have to pay to this one and then they are going to take it from there so deposit they credit to the credit card this much of it so the this the credit card is say about 20 but they don't take it the 20 because whenever they pay i i pay it within 15 days then i don't want to pay that 20 if i exceed the limited days i have to pay the rest with at 20 percent so the loan installment is at nine percent only i never use this one when the the whenever i pay the installment that's going to add for me to take it out at 20 that's what they did that the 6000 credit limit is there and at the beginning i used the total limit because of that loan and when i pay the loan installment this credit limit is persisting and as that and when i pay the gap i can use as a credit credit card at 20 that was their strategy but i never used because i know what a trap i am going to stay my mentality is to pay their off credit cards so this one i paid and this is what you can see i paid this one fully last year bill one year before fully and then i called them i told them i don't want your credit card please cancel they didn't expect they said you can keep your credit card since you have paid the loan now you can use that credit card i said no i don't want they were helpful for me to get a loan at a lower interest and but i didn't want to trap to their credit cards i say no and paid off and later i i paid this one and there was one other uh some other payment i paid that off so that is this very high tall one here it could be probably i paid this one the balance i can't exactly remember the balance i paid a lot but maybe about two three thousand i paid here to this credit card and finish it off and then i still i was using this one to then it reduced my purchase i didn't buy any groceries i didn't buy any groceries my but my mobile i was paying this early i was gas and gasoline purchases everything used to crease credit card i reduce reduce reduce it to lower and now i only my mobile phone was paid by this one monthly they said it is convenient for you then when i forget then they won't they won't cut my line off if i forget so when i don't feel and whenever i want i can pay but i calculate this one with my mobile phone i pay an interest because whenever the they take the bill i don't pay it because i i wait till they will come from the bank statement credit card statement will come and they give me 15 days also of 30 days i can't even 30 days or 15 days i wait close to that date so all those times each day after taking that mobile phone each day they get the put the interest and for the each interest accumulation the interest over interest they get so today they get the interest that interest next day is going to accumulate interest for that interest they they take next day two for those two days they take the interest for that but they accuse that my my bill is there for my bill they get at the interest and that that is called compounding interest for until i pay the bill they so it's very dangerous when i i pay sadie very high level that my mobile phone i thought i i went to the mobile phone i said remove my credit card though i pay i will pay directly then they said you have to pay directly otherwise we will carter they also like this one because it is very convenient for them to get their regular payment so then i i use my using of this one very low and nothing like so that's why you see the only payments are going on but no uses so by that way this is going to be this kind of way they you way i certain times so they are so i forget the payment minimum payment sometimes when i went some uh yeah and i don't go through this one and they this for the civic delays all those monitor by them and they call me and they told me i said it's a forget i will pay just now they said if you are going to do it two times the third bill would be this 10 will increase to 24 percent and any cash add on these old cats advances it's going as cash and indication is going into 28 per year it is not just 28 it's not just 24 for purchases they accumulate their compounding interest they don't tell the 24 compounding interest would be 30 percent the 28 compounding instant interest if you take all it would be about 34 very huge that they told me you will be fine you would be free uh punished like that and this is the end and it will last for about one year they told me it will last until that time i didn't know you were i actually asked for that so the punishment feeling so i don't like punishments the increase in the credit limit for one year or that much double more than double and compounding interest i know that so that the punishment feeling of the psychology i got away from that so they'll pay so i oh i remember to pay all the time and even before they are dead i i pay that so that's how my they use their psychology they they show the punishment and they we pay and they tell about the credit history and very reward like it is not credit history is not credit is built up by this one is very high but when if i go to this bank and ask for another mortgage or something they they don't go by that credit is there it is just a glass they glasses but they go by debt service ratio how much of my income how much of total my debts whether it is more than 30 percent then they don't pay mortgages the government says in canada it should be that total debt service ratio should be 30 percent of their income if they give a market they cannot there's a ceiling of 30 percent the whatever the up to the ceiling you can take so the loans of others should be very low that's that service ratio it is not the credit history we are misguided at the beginning i was misguided at the beginning saying this is a very good credit history was have and keep this card and if i remove this card at the beginning i would have not get paid this much of balances or anything like that so those are the psychologies they the the rewarding system that is called operand operand system operand the the when we like rewards we like rewards and then we motivate into that when they remove punishment we motivate into that when they punish we get ours from that behavior when they remove the reward we adverse from that behavior so there is averse and there's motivation using reward and punishment both way so that is what they are mainly using to get us into a behavior so our behavior all is they are developed with the reward and punishments we get away from some behaviors because of punishment or lack of rewards we get into certain behaviors because of pleasure and because of removal of pain so then then we we over time we we are in a certain behaviors these behaviors psychology of money behavior is depending on that so when it is very hardly established very difficult so it is hardly established at this point even i call that's why i just trapped into that his talk only because i my behavior was according to his talk also so that's why i trapped very within minutes i trapped to his words although my determination to overtake my determination overrule my determination by reward system when i not pay that the punishment system is there here the punishment was there but i didn't care about that this one the rewards were there i didn't care about that so when you should not go for pleasures you should not go for removal of punishments you should think of what is the right reason rationality with the rationality you can win this credit card business credit card problems so thank you very much for watching this and if you i tell you told you various things and it's applicable to you maybe may or not and please subscribe i will give you some more these things in future thank you
2021-03-07 13:37
