Dave Ramsey's Best Advice to Ditch Your Credit Card While Debt Reaches Record Highs

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KEY POINTS

  • Dave Ramsey recommends getting out of credit card debt using the debt snowball method, where you pay off cards with the smallest balances first.
  • He frequently says that personal finance is 80% behavior, meaning the habits you build play the largest role in your success.
  • Although you don't need to ditch your credit cards entirely, Ramsey is right that you shouldn't rely on them to pay your bills.


The popular finance personality is an expert on ways to stop using credit cards.

With inflation skyrocketing, consumers have taken on more and more credit card debt to get by. Total U.S. credit card debt reached $930 billion in the third quarter of this year, the highest amount since 2019. That debt is also getting much more expensive, as interest rates just hit a record high.

Dave Ramsey's solution is simple -- ditch your credit cards. Although that's an extreme measure, he's correct that relying on your credit card and going into debt will cost you. To avoid that, here's the best advice that Ramsey has given about credit cards and credit card debt.

How to pay off credit card debt

Lots of people call into Ramsey's radio show for help with paying off credit card debt. Here's the method he normally recommends:

  • Cut all your unnecessary expenses to free up as much money as possible.
  • List out your debts from smallest to largest.
  • Make minimum payments on all your accounts to keep them current.
  • Put the rest of your money on the account with the smallest balance.
  • Once you've paid off the account with the smallest balance, move on to the next smallest balance, and so on.

This debt repayment strategy is known as the debt snowball method. The reason it works well is because it keeps you motivated. When you attack your smallest balances first, you pay off accounts more quickly. Each time you pay off an account, you see clear progress on your debt, which is good motivation to keep going.

Personal finance is 80% behavior and 20% knowledge

This is advice Ramsey repeats often, especially to callers with credit card debt. Financial knowledge only goes so far. What really determines your success with money is your behavior.

Let's say you're trying to get out of credit card debt. As you saw above, none of the steps involved are complicated or require much financial knowledge. It's a matter of cutting your spending and putting as much as you can towards your credit cards. If you can build those habits and stick to them consistently, then you'll eventually be debt-free.

Have an emergency fund

Emergency expenses are often why people end up with credit card balances they can't pay off. Like most financial experts, Ramsey recommends putting money towards an emergency fund. That way, you won't need to go into debt if an unexpected bill comes along.

Ramsey's advice is to have an emergency fund with enough to cover three to six months of living expenses. However, saving that much money can take time. In his financial plan, he says to start by saving a $1,000 starter emergency fund. Once you've paid off all your debt, excluding mortgage debt, then you can focus on having a fully funded emergency savings account.

Don't borrow money to pay your living expenses

As the cost of living has gone up, many have had trouble making ends meet. Putting your living expenses on your credit cards might seem like a solution, but it's one Ramsey believes you should avoid at all costs.

As he puts it, this is a "temporary solution that is creating a permanent problem." Although it covers your expenses for the time being, the interest charges you'll accumulate will likely put you in an even more difficult financial position.

Ramsey emphasizes that your income must cover your living expenses. If it doesn't, he recommends cutting costs by any means necessary, whether that means cutting your food budget or moving to a cheaper area. Another option would be to pick up a side hustle to earn some extra money.

Credit card debt is a serious issue that can cost you quite a bit of money. Ramsey provides some good advice on how you can avoid credit card debt, or get out of it if you have card balances to pay off. His recommendation to ditch your credit cards entirely isn't necessary for everyone, as they can be a useful financial tool if you pay them off in full every month. But with rising interest rates, avoiding debt should definitely be your first priority.

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