What Dave Ramsey Gets Wrong About Credit Cards

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  • Dave Ramsey is a finance guru who promotes debt-free living.
  • He thinks credit cards should be avoided because of the potential to rack up debt.
  • Find out why credit cards can be useful as you work toward your financial goals.

Dave Ramsey thinks credit cards are bad news. Is he wrong?

Many people turn to finance gurus like Dave Ramsey to help sort out their financial struggles. Ramsey is a big believer in living a debt-free life. As you might imagine, he's not a big supporter of using credit cards. Find out what Ramsey gets 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 about credit card debt. This statement isn't accurate.

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

Here are a few 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 spending.
  • 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 practice caution, you can use credit cards to your advantage.

Credit card rewards aren't worth it

Ramsey dislikes credit cards. He's also not a fan of credit card rewards.

In one of his The Dave Ramsey Show segments, he discusses a scenario where credit card users can earn 2% cash back. He says, "Let me get this straight; if you spend $10,000, you get $200. That'll make you rich."

But he doesn't consider that many people use credit cards that offer a higher rewards rate. Plenty of rewards credit cards offer more than 2% in rewards.

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

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

If you were to use a 2% cash back card to purchase everyday products you usually buy and don't carry a balance or pay interest, $200 in rewards is $200 that 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 it off in full each month, and have a plan for how you will put your rewards to use.

What Ramsey gets right about credit cards

What does Ramsey get 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 expensive 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 using them. But don't let one financial guru's beliefs 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 extra fees.
  3. Only charge what you can afford to pay.
  4. Pay your bills on time every month.
  5. Pay the entire balance each month to avoid expensive interest charges.

If you're thinking of getting a credit card, check out our list of best credit cards to learn more.

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