What Dave Ramsey is wrong about credit cards

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


Key points

  • Dave Ramsey is a financial guru who promotes debt-free living.
  • He thinks credit cards should be avoided because of the potential for accumulating debt.
  • Find out why credit cards can help you reach your financial goals.

Many people turn to financial gurus like Dave Ramsey to help them solve their financial difficulties. Ramsey is a big proponent of living a debt-free life. As you can imagine, he’s not a big proponent of using credit cards. Find out what Ramsey is wrong about this type of debt.

There’s no reason to have a credit card

A Facebook post from Ramsey says, “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 for 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 up your credit.
  • You can easily track your expenses.
  • You can earn credit card rewards on your spending.

Of course, there are 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 aren’t worth it

Ramsey doesn’t like 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 understand; if you spend $10,000, you get $200. It will make you rich.”

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

It also does not 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 a lot of people. What one person may not consider valuable may be valuable to someone else. We are not all in the same financial situation.

If you were to use a 2% cash back card to buy everyday products you usually buy and you have no balance or interest payments, $200 in rewards is $200 you didn’t have before.

Ramsey is wrong about credit card rewards. They can provide value and be worth it. 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 using your rewards.

What Ramsey is Right About Credit Cards

What is Ramsey right? Credit card debt can be a big deal, and it can be easy to get into debt if you’re not careful.

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 a financial guru’s beliefs make you dread credit cards and avoid them forever. Credit card debt is not a given, and you can take steps to avoid it.

We suggest you follow 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 afford to pay.
  4. Pay your bills on time each month.
  5. Pay the balance in full each month to avoid costly interest charges.

If you’re considering getting a credit card, check out our list of the best credit cards to learn more.

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