Dave Ramsey and Mark Cuban Have Both Given Really Bad Advice About Credit Cards. Don't Listen to It
- Both Dave Ramsey and Mark Cuban have suggested not using credit cards at all.
- This is bad advice for most people to follow.
- Credit cards can help you out in a number of ways if you use them responsibly, such as by letting you earn rewards and build credit.
While they may be finance experts, their advice isn't always correct.
Turning to finance professionals and investing experts for advice can often give you good ideas about how best to manage your money. But it's important not to listen unquestioningly to everything you hear.
In fact, both Mark Cuban and Dave Ramsey have given advice about credit cards that the majority of people should ignore, because following it could hurt them in the end.
This credit card advice could be very bad for your finances
So, what's the bad credit card advice offered by both billionaire entrepreneur and Shark Tank star Mark Cuban and Dave Ramsey, finance guru, author, and creator of Financial Peace University?
Both have suggested you should steer clear of using credit cards entirely in virtually all situations.
Cuban has said repeatedly that "if you use a credit card, you don't want to be rich." He's suggested either cutting up or burning your cards after paying them off in order to avoid the high interest rates that come with carrying a credit card balance.
Ramsey has also said the number of credit cards you should have is zero. He's also suggested that if you have cards, you're in a "toxic relationship" with your creditors. He doesn't believe credit card rewards are worth earning and finds no reason to use a card. Ramsey suggests you can use a debit card to enjoy similar fraud protections and that you don't need to earn a good credit score since you can get along fine in life without good credit.
Here's why you shouldn't listen to Ramsey and Cuban
There are two big problems with both Ramsey and Cuban's advice.
First, both experts don't seem to be aware that it is actually possible to use credit cards responsibly. While some people don't, and can't, do that, that's not the case for everyone or even necessarily for most people.
If you can use credit cards to charge everyday purchases and then pay the bills on time before you owe interest, there's no downside and lots of upsides to them. They can allow you to earn rewards that effectively reduce the price of purchases and take advantage of cardmember benefits, like extended warranties, that save you money in the long run.
Cards can also sometimes be the cheapest way to borrow. If you have a big purchase you must make now and don't have the cash, a 0% APR card is most likely the only way to do it without owing interest.
And your card can also be instrumental in helping you build credit -- which is actually far more important than Ramsey suggests it is since your credit isn't only used for borrowing but also for many other things including setting auto insurance rates and determining how large your deposit must be when you sign up for utilities.
If you listen to Ramsey and Cuban, you could be entirely giving up on a valuable financial tool. Instead of doing that, focus on living on a budget and developing responsible spending behavior that allows you to use cards to your benefit rather than to your detriment. You'll be a lot better off in the end if you do that.
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