Don’t Become a Debt Slave
“If you can’t pay cash… you can’t afford to buy it.”
I said that to my daughter as she eyed a new pair of shoes she felt she had to have.
This despite already owning 10 times the number of shoes that I have in my closet. I know better, though. I kept that one to myself…
You might think my attitude about credit is an old-fashioned one. But Americans are way too quick to whip out a credit card to buy something they really don’t need.
And I’ve beat that philosophy into my two daughters’ heads for years and years.
I am proud to say that they have largely listened to that advice. However, I can’t say that about most Americans, who are hopelessly addicted to plastic.
Credit Card Debt Balloons to $1 Trillion
Americans owe a collective $4 trillion of nonhousing consumer debt, $1 trillion of which is credit card debt. The average balance for every American adult is $6,375.
The typical American has three credit cards in their wallet and pays an average interest rate of 16.4% on their credit card debt.
“If you use a credit card, you don’t want to be rich.”
— Mark Cuban
That sounds awful, and the payments on that debt amount to a mountain of money.
Last year, Americans collectively paid $110 billion in interest and fees to credit card companies, a 13% increase from the $98 billion of interest paid in 2017.
Dumb, dumb, dumb.
I don’t tell you this to lecture you about how you should use your credit cards.
I’m telling you because I want you to be on the receiving end of that $110 billion of interest payments.
The Credit Card Business Is BOOMING!
A great place to invest some of your money to tap into this river of cash is with the largest credit card issuers in the U.S. These are:
- Visa (NYSE: V) – 323 million cards issued
- Mastercard (NYSE: MA) – 191 million cards issued
- JPMorgan Chase (NYSE: JPM) – 93 million cards issued
- American Express (NYSE: AXP) – 58 million cards issued
- Discover (NYSE: DFS) – 57 million cards issued
- Citigroup Inc. (NYSE: C) – 48 million cards issued
- Capital One (NYSE: COF) – 45 million cards issued.
The credit card business is controlled by a small number of players that hog most of the world’s retail sales and almost all of the online shopping.
Plus, credit card companies not only earn interest on unpaid balances, but they also get a piece of every transaction from the retailer too. How much? An average of 1.5–2.9% on every transaction they process.
Mastercard, for example, collected $21.8 billion of credit card fees last year. It pays to mention their stock is up almost 43% year to date as well.
Plain and simple, there is a lot of money to be made by investing in credit card companies.
That doesn’t mean you should plow your life savings into any of the above stocks after you finish reading this article.
As always, you need to do your own due diligence and pick the right time to jump on board.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch