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And a shocking new trend among our nation's young people they are ditching credit cards.
And what they're turning to instead is causing alarm and costing them money joining me now John Alzheimer consumer education president for Smart -- dot com.
What's the -- on John.
Yeah out Gerri I'm not sure this is good news or bad news to be quite honest with you on one hand you have young people who are using credit cards -- and air force staying out of credit card debt which is nice.
The problem is is -- they're going to use plastic it's that's a fact.
And so what type of plastic and actually -- -- -- in my mind there are two reasons that are causing this trend.
A downward usage among among young people one is the card act the card act made it.
More typical for people under 21 to get a credit -- because now they're required either have a job or co -- Number two is the incredibly aggressive marketing that the prepaid debit card.
Which is targeting young people and minorities.
As an alternative.
To credit cards and well they beat John -- -- those two things this is causing the trends let's talk about that prepaid debit card you and I've done this before in the past we're not big fans tell people what I.
Yeah I'm I'm not a big fan and I'm not a big fan for a couple of reasons first stop is the marketing and -- I -- on past.
-- they're suggesting that creek prepaid debit cards are better alternative than traditional checking accounts that there are less expensive than traditional checking -- because you don't have to pay overdraft fees.
And that they do in fact help you establish and build some sort -- credit history none of that has actually true.
Not a prepaid debit card is what's called a stored value card which means you load money onto the card itself.
That's not sitting in an account anywhere like it a like a traditional debit card wide and and you actually have to pay fees to using either a monthly -- I'm ATM fees paper statements he's like customer service fees that the speech just don't want we don't have long had to go through all the -- -- frankly and we have a happy -- -- Florida.
Right yeah this is an FDT this isn't a -- to use your money this is a fee to use my money.
And I don't like paying a -- people or is it always get angry about fees to use credit cards at least that's a bank's money.
This is a -- I hear your own money which is one of the reasons is right.
-- I think about it right like to pay to use your own money just carries some cache but given this issue for me and I think this is something that people get hung up on.
The banks are expensive to.
They're charging monthly fees for your checking account what is the advantage of having a real relationship with a bank if you're -- young person.
First off it's it's it's it is a fact that banks charge these banks are for profit organizations and that's one of the -- that may make money having said that.
They if you're creative and are willing to -- a little -- -- research into choosing the bank in choosing the type -- account you have what the bank.
That it's actually not that hard to find eight -- free checking relationship.
-- that this this rumor that that that -- free checking is -- is absolutely not true.
A lot of places all for -- -- free checking accounts for just do a little satellite were to find out what.
Have a relationship of the bank and not a bad thing you had access to god knows how many ATM machines your money is insured by the federal government.
It's it's it's my -- or light -- when he wanna borrow money to buy a house.
Or finance and education or buy a car.
Or credit car -- plastic capacity it's almost completely fraud prevention for Iraq.
-- guaranteed because the federal law it's actually not a bad thing to have a relationship of the bank but yet we demonize them.
As if they're evil simply because they -- -- but there for profit so you know they're going to charge -- over down.
-- -- -- -- Avoid them I listen to this so young people banking 4545%.
Giant prepaid cards -- catch him.
Payday -- this course of course summits is like that's terrible where he.
Not coming up went the last thing you.
-- millennial today -- Yeah so our case let me let me essentially since -- love to -- to talk quantify it for them.
The average interest -- on -- credit card -- the worst thing in the world right democratic part of about 15%.
Annualized interest you're gonna pay on -- payday loan or pawnshop long and it's over 100%.
So compare those numbers it.
That's -- -- -- a better option that's right well but very well click -- always good John thank you for coming on.
All right Gerri have a good weekend you as well.
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