The Clark Howard Podcast: Episode Summary – December 11, 2024
Title: Tariffs and Car Prices / Store-Branded Credit Cards
Host: Clark Howard
Release Date: December 11, 2024
Introduction and Holiday Campaign
Clark Howard opens the episode by expressing gratitude for donations to the annual Clark's Christmas Kids campaign, now in its 34th year. He highlights the campaign's mission to provide gifts for children in foster care, ensuring they experience the joy of Christmas despite their challenging circumstances.
"I hope you'll consider donating whatever you can... you know, that absolute stranger cares about them, loves them and wants them to have a Christmas morning like other kids get."
[00:56] Clark Howard
Discussion on Tariffs and Car Prices
Clark delves into the prevalent discussion about tariffs, especially in the context of President Elect Trump's potential return to office. He critiques the hype surrounding tariffs and their actual economic impact, drawing parallels to the harmful universal tariffs of the 1930s.
"Tariffs are not a dollar for dollar, it's a percent of purchase increase in an item."
[03:20] Clark Howard
Clark argues that while some tariffs may lead to increased prices for consumers, the widespread fear of tariffs is largely exaggerated. He emphasizes that many new vehicle brands are currently overstocked, giving consumers more bargaining power than in previous years.
"Don't let the politicians and the media hype the tariffs. Don't let them change your behavior."
[05:15] Clark Howard
Listener Questions on Car Buying and Leasing
Clark addresses multiple listener inquiries related to car purchasing and leasing:
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Renee from Florida on Leasing Incentives:
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Clark advises understanding personal intentions behind leasing versus buying.
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Suggests that buying is generally more cost-effective for those who keep cars long-term.
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Points out that leasing can be beneficial for those who prefer newer models every few years and can take advantage of manufacturer incentives.
"If you do, as a general rule, you're better off buying rather than going through a lease."
[06:33] Clark Howard -
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Susie from Oregon on Selling vs. Donating an Old Honda Accord:
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Clark commends Susie's frugality and long-term ownership.
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Recommends selling the car to recoup repair costs, as the vehicle's value remains despite aging.
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Suggests that selling and then donating proceeds can be more beneficial than donating the vehicle itself.
"From a straight financial standpoint, you will make up that cost... So don't feel bad that you spent that money."
[10:01] Clark Howard -
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Anita from Georgia on Nissan’s Future and Vehicle Value:
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Clark reassures Anita about the stability of Japanese automakers, explaining the likelihood of acquisitions rather than shutdowns.
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Advises against preemptively trading in her Nissan based on unlikely scenarios.
"It would be very, very extremely remote that a possibility like that would occur."
[12:24] Clark Howard -
The Dangers of Store-Branded Credit Cards
A significant portion of the episode is dedicated to Clark's critique of store-branded (monoline) credit cards. He explains why these cards often carry exorbitant interest rates and minimal benefits, making them detrimental to consumers.
"These store cards are a poison in your pocketbook, and I don't want you to carry them because... the interest you're paying is obscene."
[16:13] Clark Howard
Key Points:
- High Interest Rates: Many store cards now charge between 35-36% interest, significantly higher than typical credit union or bank credit cards.
- Limited Usefulness: While some may offer discounts or rewards, the high interest rates negate these benefits unless balances are paid in full each month.
- Credit Impact: Carrying multiple store cards can negatively affect credit scores, as seen in his reference to monoline cards being viewed as "junk credit."
Clark advises consumers to avoid store-branded credit cards altogether, emphasizing that the financial risks outweigh any short-term perks.
Listener Guidance on Credit Improvement
Clark responds to a listener, Chaz from Georgia, who has impressively improved his credit score from 345 to 755 in a year. Chaz seeks advice on managing his credit utilization and future credit strategies.
"That is the most extreme improvement in credit score in a year I think I've ever heard from a listener or viewer."
[19:15] Clark Howard
Recommendations:
- Maintain Low Utilization: Keep overall credit utilization below 30%, ideally paying down balances before statement closing dates to reflect lower utilization.
- Diversify Credit Lines: Maintain at least two different credit cards from different issuers to enhance credit profiles.
- Strategic Card Usage: Use the new Southwest card responsibly by paying balances in full each month to avoid high-interest charges.
Advice on Gifting for Daycare Teachers
Mike from Minnesota asks about the best way to give holiday gifts to daycare teachers, expressing concerns over the reliability of Visa gift cards.
"The Visa gift card product has been a very vulnerable product where you buy the card, you give it to somebody... there's no money on the card because of the lack of security."
[23:52] Clark Howard
Clark strongly advises against using Visa gift cards due to security vulnerabilities that can lead to cards being emptied by fraudsters. Instead, he recommends giving cash directly to ensure the full value reaches the recipient without the risk of theft or loss.
"Cash is king. Nobody's going to be able to compromise that $20 bill or $40 you give."
[24:05] Clark Howard
Rental Car Rates During Holidays
Tony from Massachusetts inquires about reducing exorbitant rental car rates during the Christmas-New Year period. Clark provides practical suggestions to potentially lower costs.
"Check Turo... it's like an Airbnb for cars, rent their own vehicles out and you may find a better deal."
[26:11] Clark Howard
Additional Tips:
- Reshop Rates: Re-examining rental options closer to the travel date may uncover better deals.
- Leverage Memberships: Utilize memberships like Costco Travel for discounted rates.
Conclusion
Clark Howard wraps up the episode by reiterating his commitment to helping listeners save more, spend less, and avoid financial pitfalls. He encourages continual engagement through his platforms for ongoing financial advice and support.
Notable Quotes:
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"These store cards are a poison in your pocketbook..."
[16:13] Clark Howard -
"Cash is king. Nobody's going to be able to compromise that $20 bill or $40 you give."
[24:05] Clark Howard -
"Tariffs are a tax on consumers, on goods they buy."
[03:25] Clark Howard
This episode of The Clark Howard Podcast offers valuable insights into navigating economic headlines, making informed decisions about vehicle purchases, managing credit wisely, and selecting secure gift options. Clark's practical advice empowers listeners to make sound financial choices amidst seasonal challenges and broader economic discussions.