Credit Cards

What’s wrong with Dave Ramsey about credit cards

Image Source: Getty Images

Dave Ramsey thinks credit cards are bad news. It is wrong?

Key points

  • Dave Ramsey is a finance guru who promotes debt-free living.
  • He thinks credit cards should be avoided due to the potential to rack up debt.
  • Find out why credit cards can help you reach your financial goals.

Many people turn to financial gurus like Dave Ramsey for help with their financial problems. Ramsey firmly believes in living a debt free life. As you can imagine, he’s not a big fan of credit card use. He finds out where Ramsey is wrong about this type of debt.

There is no reason to have a credit card.

A Ramsey Facebook post reads, “There’s no good reason to have a credit card,” and links to an article on credit card debt. This statement is not accurate.

Yes, credit card debt is a problem for some people, but not everyone. There are many good reasons to use a credit card responsibly to improve your financial situation.

Here are some reasons to use a credit card:

  • You can pay for larger purchases without carrying cash.
  • You can use your credit card to build your credit.
  • You can easily track your expenses.
  • You can earn credit card rewards on your spending.

Sure, there are some potential downsides to using credit cards (like credit card debt), but if you’re careful, you can use credit cards to your advantage.

Credit card rewards are not worth it

Ramsey doesn’t like credit cards. He, too, is not a fan of credit card rewards.

In one of his segments on The Dave Ramsey Show, he discusses a scenario where credit card users can get a 2% refund. He says, “Let me get this straight, if you spend $10,000, you get $200 back. That will make you rich.”

But don’t consider that many people use credit cards that offer a higher rewards rate. Many rewards credit cards offer more than 2% in rewards.

It also doesn’t consider the value of credit card sign-up bonuses. Many rewards cards offer a sign-up bonus of $500 or more.

Another point worth mentioning is that $200 is a lot of money for many people. What one person may not consider valuable may be valuable to another person. We are not all in the same financial situation.

If you used a 2% cash back card to buy everyday items you normally buy and you don’t have a balance or pay interest, $200 in rewards is $200 you didn’t have before.

Ramsey is wrong about credit card rewards. They can provide value and be worth the effort. Just make sure you choose the right card for your needs, understand how the rewards program works, pay in full each month, and have a plan for how you’ll use your rewards.

What Ramsey Gets Right About Credit Cards

What is Ramsey right? Credit card debt can be a big problem, and it can be easy to rack up debt if you’re not paying attention.

Many people struggle with costly credit card debt, but not everyone does. Credit cards can be a powerful personal finance tool when used carefully.

Don’t be afraid of credit cards

Are credit cards bad? No. You should make sure you know the pros and cons of credit cards before you use them. But don’t let the beliefs of a financial guru make you fear credit cards and avoid them forever. Credit card debt is not a given and you can take steps to avoid it.

We suggest following these steps when using credit cards:

  1. Follow a budget to avoid overspending.
  2. Choose a card with no annual fee if you want to avoid additional fees.
  3. Only charge what you can pay.
  4. Pay your bills on time every month.
  5. Pay the balance in full each month to avoid high interest charges.

If you’re thinking about getting a credit card, check out our list of the best credit cards for more information.

The best credit card eliminates interest until the end of 2023

If you have credit card debt, transfer it to this top balance transfer card locks you in with a 0% introductory APR through the end of 2023! In addition, you will not pay an annual fee. Those are just some of the reasons why our experts rate this card as one of the best options to help you control your debt. Read the full review of The Ascent free and apply in just 2 minutes.

Related Articles