4 Credit Card Myths Dave Ramsey Doesn't Want You to Believe

by Maurie Backman | Published on Sept. 2, 2021

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Young African American woman uses her tablet and credit card to shop online from home.

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After reading this, you may be inclined to cut up your credit cards and never open one again.

Dave Ramsey is clearly not a fan of credit cards. And he's certainly not a fan of poor financial advice and misinformation. With that in mind, here are a few credit card myths Ramsey is on a mission to debunk.

1. Credit cards are fine and most people pay them off every month

If you pay your credit cards in full every month, they won't hurt you financially. That's a true statement. But that's also a pretty big "if." According to the Federal Reserve Board, only 48% of Americans pay off their credit cards in full by the time their bills are due. That means more than half of Americans rack up interest on their credit card charges.

2. Credit cards give you free money with no strings attached

Many credit cards offer cash back or rewards for your purchases. And that is indeed free money. But if you don't manage to pay off your balance in full every month (which, as we just learned, is the case for most people), then what you earn in cash back you lose in the form of a much higher interest rate on the purchases you carry forward and pay off over time.

3. Having a credit card is essential for buying a home

You need good credit to qualify for a mortgage. But if you misuse your credit cards, your score could take a beating. And since there are other ways to measure how well you pay bills outside of your credit cards, you definitely do not need one to buy a home.

That said, you will need a good credit score to qualify for a home loan. If yours could use some work, you can raise it by:

  • Paying all incoming bills on time
  • Paying off some credit card debt so you're using less of your total available credit
  • Getting added as an authorized user to a friend or family member's credit card that's been open for years and is in good standing
  • Correcting errors on your credit report (you're allowed a free copy from each reporting bureau every year, and right now, weekly credit reports are free through April of 2022)

4. You need a credit card for emergencies

Many people routinely fall back on their credit cards when unplanned bills strike. But that also means people regularly set themselves up to carry a balance and accrue interest on it. A better bet is to have an emergency fund equal to three to six months of living expenses in savings. That's the source you should turn to when the unexpected strikes.

While Dave Ramsey may not endorse credit card usage, the reality is that there are ways to use your cards responsibly and reap many benefits from them. If you're going to use credit cards, though, be sure to follow these key rules:

  • Always pay your bills on time
  • Never carry a balance
  • Don't spend extra to snag rewards or bonuses
  • Don't use a credit card in place of an emergency fund

If you stick to these guidelines, your credit cards might serve you well -- even though Ramsey would likely advise you not to open any in the first place.

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