NEW MAJOR CHANGES FOR ANYONE WITH A CREDIT CARD (DETAILS)

What's up guys, it's Graham here. So, in the middle of this whole crisis, we got to talk about something slightly more unconventional here, and to do that, it's gonna require that we get back to the roots and the basics of this channel, and that would be credit cards. That's right! It's been forever since I've talked about using credit cards to help boost your credit score, get free stuff, and travel for the cost of absolutely nothing.

However, during a time while unemployment skyrockets, lenders brace for defaults, and the entire stock market acts of full, credit card companies are adjusting their entire practices, and that in turn affects you as the customer alongside with your credit score. So, with that hefty introduction, we're going to be talking about the three major changes that just happened in this video.

One is gonna be the very massive overhaul to credit cards coming in the very near future. Two, the brand new rewards that you can expect moving forward, since no one is really traveling right now. My condolences to the Chase Sapphire Reserve. And three, we're gonna be going over the best credit cards you can get today, as of 2020, that are going to give you the best bang for the buck.

Whether you're looking for something with 0% interest or something with cash back while you're stuck at home doing not much other than watching YouTube videos. And you know I'm gonna say it, get ready for it: smash the like button for the YouTube algorithm! Thankfully, there are no major overhauls to smashing the like button in 2020; it's gonna be just as good today as it is years from now. So, make sure to do your part to help the algorithm, uh, smash the like button.

And with that said, let's begin the video here. So first, let's start here. Over the next few weeks, we're gonna be seeing three major changes occurring to credit cards and your credit score, and most likely this is going to impact you in one way or another. The first of which I want to get credit to Ask Sebby for mentioning this in one of his recent videos, which brought it to my attention, because no one has really been talking about this much.

See, here's what's been going on. In the past, or should I say in the good old days, getting a credit card was relatively easy. When the times are good and money is just flowing, credit card companies are out there just generously accepting applications, and they just think to themselves, "Hey, as long as we give the customer a reasonable credit limit, then most likely they're gonna pay it back for sure."

We get 3% of our users falling behind in their payments and defaulting, but the 25% interest that we charge everyone else should more than make up for that. However, that is now beginning to change. It was a well-known and assumed rule that credit card companies would never actually verify how much money you say you make when they ask you, "How much money do you make?"

For the most part, they'll just trust what you tell them, and as long as you tell them a reasonable amount, then they'll give you a credit line based off how much you say you make. In a way, it's no different than applying for a mortgage and telling them, "Yeah, I made five hundred thousand dollars a year while I live at home with my parents and play Black Ops all day, while I hang out with my friends because I'm 19 years old."

But I'm gonna certify right here, click a little button, then I make four hundred thousand a year. And yeah, there we go, that's it! Well, that's exactly what's been happening with credit cards. Evidently, they've had enough of a concern that their applicants are overstating their income just so that they would be able to get higher credit limits.

So, recently, they've been paying closer attention to their applicants' income and then potentially verifying it if they suspect that you have a high risk of potentially defaulting. They do this by requesting you fill out a 4506-T form, which allows them to view your tax return with the IRS to confirm your income.

And then if they find out you've been overestimating your income, then they have the right to cancel your account or adjust your credit limit accordingly. So, in this one, it's a sign that credit card companies are maybe concerned about their users charging up more money than they could reasonably handle and then not paying it off.

And then too, they're now gonna be way more careful about who they issue credit to. Or in other words, just a piece of advice here: don’t lie! As long as you're telling the truth, you're gonna be just fine. And if you got caught lying, then you shouldn't have lied; instead, you should always just smash the like button for the YouTube algorithm instead.

Now, the second credit card change has been coming up a lot in the news lately, and a lot of people are rather disappointed with this action. That's because banks have been suddenly lowering credit card limits with no advance warning whatsoever. Like, imagine having a fifteen thousand dollar credit line and wanting to buy ten rolls of toilet paper.

So you go and charge your credit card fifteen thousand dollars for those 10 rolls of toilet paper and then realizing, wait a second, I don't have fifteen thousand dollars anymore; I only have ten thousand dollars. Well, that's what's happening, except maybe not with the toilet paper example, but you get the idea.

See, according to Synchrony Financial, "We're continuing to utilize internal and credit bureau triggers to dynamically reevaluate the customer's credit worthiness to manage credit exposure," which is basically a very fancy way of saying we're not gonna give people as much credit because we think they're less likely to pay it down during a bad economy and therefore we don't want to be stuck footing the bill for this.

And this has been something that is popping up everywhere lately from Business Insider, news, CNBC, The Points Guy. Click Orlando—oh wait, no, wrong article. That was about a dude I was reading about the other night who trespassed into Disney's Discover Island and called it a tropical paradise. That guy is, wow, something else!

Anyway, credit limit decreases during this time from a credit card company's perspective does make some sense if someone loses their job and then depletes their savings. Typically, credit cards would be next in line, and if people are unable to get jobs to then repay back those credit cards, then it's a high likelihood of going into default, which then hurts the credit card companies.

So, in a way, the credit card companies are trying to get ahead of this issue by decreasing the credit lines of people who they might consider to be potentially a higher risk, and that way they'll be able to mitigate their risk of having people charge up their credit cards and then be unable to pay it back. However, the downside to you as a consumer is that if your credit line decreases, then so could your credit score.

That's because 30% of your credit score is made up of what's called your credit utilization, or in other words, how much credit you have available to you versus how much of it you actually use. So, the more credit you have available to you, then generally the higher your credit score will be because any time you go and make a charge, the lower that percentage that you're going to be using.

Imagine that like you have a ten thousand dollar credit limit, but you only spend a thousand dollars a month. In that example, your credit utilization is 10%. But if your credit line drops from ten thousand to five thousand dollars and you still have that same $1,000 a month spending, well, that means now your credit utilization is 20%, which could marginally reduce your credit score.

As far as who's being impacted by this, it was found that during the last recession, 20% of people with prime credit scores got a cut and 60% of non-prime cardholders got their credit lines reduced. So, given that, I think it's safe to say that most likely a portion of you watching this video right now are going to be directly affected by this.

But you're much less likely to be affected by this if you already have a good credit score to begin with and make sure you pay all your bills on time. Although if you do see this happening to you, then here's what you could do about it.

First, call them and ask and see if they'll restore your previous credit limit. It never hurts to ask, although just keep in mind they're not obligated to give this back to you. Or second, it's odd and counterintuitive as it is to say, you could always just go and apply for a new credit card to offset that credit line decrease. Other credit card companies might not mind taking on the risk, and you're gonna be able to get another tradeline on your credit reports that in the long run is gonna help out your credit score.

But overall, as much as this can hurt, it makes sense; I get why they're doing this, and this impacts so much more than just credit cards. Even Chase Bank has been denying home equity lines of credit, and if anything, that's a sign that companies are really bracing for the worst and doing everything they can now to make sure they come out of this okay.

At the end of the day, just expect that going and getting a credit card is going to be just slightly more difficult. They're gonna be more likely to verify your income, and they'll potentially give you a lower credit line than they would previously. Next, coming soon to a credit card near you are different rewards than we're accustomed to.

And the first change would be coming from none other than American Express. Obviously, we could have seen this one coming because there are so many travel credit cards out there that no one is using because we just can’t travel and use them. So, it makes sense the credit card companies are shifting their rewards to reflect the current status of our economy.

We're gonna be starting off with the American Express Platinum, which is one of my all-time favorite credit cards. And right now, when you go to their main site, they're extending the deadline for the signup bonus by three months. Meaning in the past, you would have three months to meet the $5,000 minimum spend in order to get the signup bonus. Now, you're gonna get an extra three months to meet that minimum spend.

That's really good news for anyone who wants the signup bonus for eventually whenever they can travel, but you don't normally spend $5,000 in three months to meet the minimum spend. Well, now you have six months to spend the $5,000 and get the signup bonus. In addition to that, the American Express is also adding $20 a month in streaming credit from May 1st until December 31st when you pay for those services with your credit card.

That includes Netflix, Hulu, Spotify, and even YouTube Premium! That's right! I think for the first time ever, I can actually pay for YouTube Premium and have it be completely free when I pay for it with my American Express Platinum. In addition to that, they're also going to be giving you a $20 per month credit for wireless telephone services, including AT&T, Sprint, T-Mobile, and Verizon—which is pretty much everybody.

So, automatically right there, that's $40 a month in free credit and streaming services just for using your credit card. That change is to make up for the fact that right now you're probably not using your $15 a month Uber credits, you're probably not using the Centurion lounge access anymore, and you're probably not using the $200 airline credits.

They feel like the new credit changes might make up for that. The Platinum business card is also going to be including a $20 per month shipping credit as well, which I guess comes in handy if you don't have Amazon Prime, which come on, I mean, everyone now should probably have Amazon Prime if you don't already.

And also, they're gonna be giving you 15 times points back when you spend money on toilet paper and hand sanitizer. Just kidding! Now that one was a joke. And also, there are quite a few other AMEX cards that have changes and revamped offers, although because there's so much to go over with this, I'm just gonna link them down all below in the description.

Another change to a popular credit card out there is with the Chase Sapphire Reserve, which is now going to be offering you five times points back when you spend money at grocery stores. That's like getting seven and a half percent back any time you spend money in the grocery store when you apply that towards travel, which I think is a phenomenal deal.

And also, a lot of the other Chase cards are offering similar bonuses to this as well. So all in all, it seems like credit card companies are shifting their rewards around, making the user experience better. Or really, the way I see it, they're trying to give you something so that you don't cancel your credit cards during a time where right now you're not really using many of the benefits.

So for people who have these credit cards already, it's just a nice little bonus on top of everything else you get for a time where you're stuck at home watching YouTube videos and smashing the like button. As far as which cards I think are worth getting in the middle of everything going on, here's a few that I really like.

Now, first is gonna be the Chase Freedom Unlimited, and I like this one a lot because there's no annual fee, which means it's my favorite word in the entire English vocabulary—and that would be free! So this card does not cost you anything, and they're going to be giving you back $200 when you spend $500 in the first three months.

So for anyone who's planning to spend $500 over the next three months anyway, then you may as well just put it on this card and get $200 back. Plus, you're gonna be getting 1.5% unlimited cash back on every single purchase. So for anyone looking for an all-around good card with no annual fee that gives you money back, this one would be it.

The other really good thing about this credit card—and it's a little bit dangerous, but let me just explain this—is that they're offering you 0% interest for the first 15 months on your purchases. Now this one could be really useful for anyone who would otherwise have to put their spending on a really high interest credit card or pull a home equity line of credit or do anything else that's high interest.

So from that perspective, this is better—at the very least—to be able to put the spending on this card and at least avoid interest for the next 15 months on your purchases. I'm not ever advising anyone to spend money that they don't have or try to rack up a whole bunch of debt on this card and then avoid paying it off.

But instead, if you need a fallback and your other options are gonna cost you an arm and a leg, then this is a better option all things considered. But just make sure to pay that off at the end of the 15 months, otherwise you're gonna end up paying an arm and a leg in interest.

The second card I recommend a lot is the Bank of America Cash Rewards Card that I've talked about non-stop here on the channel, but now it just got a little bit better by giving you $200 cash back when you spend $500 in the first three months. So again, that's pretty much free money with no annual fee! Plus, they're going to be giving you 3% cash back in the category of your choice, 2% cash back at grocery stores, and 1% cash back on any other purchase.

And third, the other credit card that I highly recommend is going to be the Citi Double Cash Card that also has no annual fee. 2% unlimited cash back on all purchases, and also an intro APR of 0% for the first 18 months. Now, honestly, this is a card I highly recommend to anyone anyway just because of the 2% unlimited cash back on all purchases, but the 0% interest for 18 months makes it just that much better.

So, overall, I think all of these are somewhat reasonable changes taking place given the current circumstance that we're in. It makes sense that credit card companies would become more strict on their approvals and income verification. It makes sense that they might be reducing credit limits, given their own personal risk tolerance.

It makes sense that they'll begin restructuring the rewards around how people are currently spending their money. I also have a feeling that other credit card companies are soon going to be following this as well. Like, mark my words, we'll come back at this in a few months and see if this came true, but I have a feeling the Chase Sapphire Reserve is gonna do something massive to try to compete with the American Express Platinum for giving the $40 statement credit every single month towards streaming and phone services.

And the Chase Sapphire Reserve right now, they have a $300 travel credit that's probably not really being used much right now, so I have a feeling they're gonna come back in a few months from now trying to compete with that American Express Platinum, but we'll see what they end up doing.

And for anyone out there who already has a good credit score and wants to open up a few other credit cards and get some money back, then those are the options that I would recommend— all things considered. And at the very least, if you're home spending money anyway, you may as well get some money back for things where otherwise you would get nothing.

And then, of course, on top of everything else, you could enjoy some of those sweet, sweet points. So with that said, you guys, thank you so much for watching! I really appreciate it. As always, make sure to destroy the like button, subscribe button, and notification bell! Also, feel free to add me on Instagram; I post there pretty much daily. So if you want to be a part of it there, feel free to add me there as my second channel, The Graham Stephan Show.

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