Credit Debt Cures

Do you agree or disagree with financial guru Dave Ramsey about credit cards?

Popular radio talk show host Dave Ramsey preaches against even having one credit card. Agree or disagree and WHY?

Public Comments

1. I disagree with that. It's important not to get out of control with them, but unless you often carry large amounts of cash in your pocket or always have checks and surplus money to write them with, you need at least one in today's economy.
2. I disagree, as there are sometimes where you just cannot use your debit card and certainly dont keep an excessive amount of cash laying around, and I rarely use my checkbook. if you want to rent a car, you need a credit card, a debit card will 'hold it' but you need a real credit card to pick it up.
3. IF you pay your balance every month there is nothing wrong with a credit card. In fact its an interest free loan. His stance is due to the ease with which one can become mired in excessive interest payments as a result of credit card balances
4. Hybrid approach here... I've got a debit card I use for nearly everything. However, I more often use the credit card for online purchases and for any kind of long-term things (like my failed Sunrocket VoIP service !!) I'll also use it for business travel since I expense back my items. That being said, it stays in my wallet when I'm out and around town 95% of the time. It's easy to spend with a credit card and how many people are having problems with credit card debt, interest rates out of control, ridiculous marketing, changing of terms only by the credit card company, etc. Remember, Ramsey also suggests that people get emergency fund money up front to avoid having to put yourself in a debt risk situation for emergencies. Also for big ticket items, Ramsey is going to suggest saving the money, and then buying. Receiving interest on funds before spending is cheaper than paying it in form of a loan. Many people can't manage well with credit cards. Dave Ramsey's plan is rather "pure" and simple, but the nice thing is, it's pretty simple to follow or keep up with.
5. I disagree. I see nothing wrong with using credit cards for everyday things like gas and food as long as you pay them off in full every month before the due date. There is no interest, a paper trail or your spending, you do not have to carry as much cash, rewards like cash back and airline miles and they are great for building your credit. I have used two credit cards like this for the last two years and have never paid interest, collected over $150.00 in cash back rewards and raised my credit score over 150-points. I think the reason that Mr. Ramsey preaches aganst credit cards is it's so hard for most people to control their spending.
6. I disagree because some credit cards have cash and travel rewards. if you use the card, get the benefits, and pay it in full every month, its costs you nothing and you get free stuff. I listen to him and agree with most things, but I have a card that gives cash back into my savings. I use it for regular expenses that I would normally use a debit card for and I get free cash and pay it off every month because its I'm buying my normal stuff with it.
7. I disagree. You need credit in this life to survive. Maybe not credit cards but they make life easier. As many waid before, if you are wise with how you use it, credit cards are not a probelm. How will you reserve a hotel room? Rent a car? Pay certain bills at the last minute versus getting a lte fee and a credit hit? Sure you can use your debit for all of thses things but only if you have the money right then and there. CC helps you build credit when you get ready to purchase a home a car, need am emergency home. You have to start building somewhere and alot of times a credit card is the easierst way to start. The key is being wise with credit,pay it off at the end of the month, dont buy thi ngs you cant afford, use only when you have to, etc... Finally everyones situation is different, what works for a million may not work for 1.
8. Ramsey is against CC because people have such a hard time saying NO when they see something you want. 99.9% of the people don't know the difference between "I want" and "I need".
9. I don't listen to Dave Ramsey's radio show (because, honestly, I'd rather listen to Howard Stern) but I have actually read some of Dave Ramsey's books and used one of his workbooks about 9 years ago. I paid off my small debts 1st, then applied what I was paying on the small debts toward my medium debts, then the same toward the large debts. What he tells you to do to become debt free is pretty simple to follow. A lot of folks who are in debt to the point where they need financial counseling are there because of credit cards any way. The subject of credit cards (whether to have them or not) is kind of a double edged sword. It's not necessarily bad to have them, but it's bad if you don't practice self discipline and you abuse them. Credit cards are great for emergencies, no doubt, I carry an American Express card (which doesn't have a limit and has to be paid off every month) and I use it (not abuse it) whenever I need to. There are some people out there who, without a doubt, have no business owning a credit card. But overall I see no problem with credit cards if the card bearer is responsible and doesn't have a shopping addiction.
10. I agree with Dave...to an extent. To some, credit cards can be equated with guns: they can't do any harm by themselves. It's only when they fall into the wrong hands when the problems start. It's sad that to see how easy people can get them and then get into debt with them. But in all fairness, knowledge is power. The more you know, the less likely to succumb to the same problems. If one can save up a nice nest egg, and use it for emergencies, I'm all for that. But a lot of people just don't have it like that. There are times when it's necessary to have a credit card. A classic example would be renting a car. Granted, it's possible to rent a car with a debit card, but the door opens for more potential problems. I'll use myself in this example. I use my credit card to rent a car, and pay for it with my debit card once I'm done. That way, I have the rental coverage in the event of an accident, and then I don't accrue any finance chanrges since it was only an authorization or hold. Another example is that I love to travel, and I have a credit card that has a killer travel rewards program. Well since I'm going to spend that money anyway, I might as well take advantage of it. This is when that powerful knowledge I was talking about earlier comes in. Since the Fair Credit Billing Act states that I have 2 weeks to get a statement to pay it in full before I'm charged interest, I can book my trip, get the air miles and then pay it off as soon as the bill comes or even before it comes during the grace period. So in actuality, it would be no different from me buying it on my debit card, except I'm building up credit and I'm racking up points. So there are some advantages to having a credit card. I feel where people get into trouble with credit cards is that they completely forget the way which they should be used as a tool. A common fallacy is to confuse needs vs. wants and in turn the "eyes gets bigger than the stomach" which leads to people living outside their means. This is where I agree with Dave wholeheartedly, Some people were not meant to have credit cards, bottom line. Not enough discipline. Not enough knowledge. Just those 2 factors alone constitute a recipe for disaster. I think that you should take a class in jr. high or middle school on credit. Whether you go Dave's route and save up to apy of every thing in cash or be the next credit guru Suze Orman, that information can prove more valuable than ever. But to answer your question. I believe in credit cards, I just don't believe that everyone should have them without knowing the full scoop.
11. For people who view credit cards as a source of easy financing ... he is 100% correct. For people who use credit cards as a convenience ... he is wrong. Credit cards should be used for convenience and never for financing. They should be paid in full monthly. I would wager Dave carries credit cards. It is hard to travel without them.
12. I totally agree. You spend more with plastic. McDonald's said that when they started accepting credit cards that the average transaction went from $4.75 to $7.00. there is not emotion attached with plastic. would you like a hot apple pie with that? No thanks! You can do anything with a debit card that you can do with a credit card. Including renting a car or reserving a hotel room. As far as getting a mortgage. You can get a mortgage without a fico score and at the going interest rate. Its called manual underwiting.The way it used to be done before the fico score (I Love Debt Score).
13. No. Dave's advice about living below your means and staying out of debt are good. His view on credit cards is only for people who are financially out of control. I have no debt but I pay EVERYTHING with credit cards. I pay the balance in full each month. This gives me MUCH better protection and record keeping and convenience than paying in cash or check cards. I do not spend more with a credit card than with cash. And as everyone with ANY financial sense knows, debit cards are a REAL bad choice so I never use those. Dave has some good advice and he is a real great communicator but he is also selling a LOT of products and BS on his show every day too. You have to know when to tell the difference.
14. Agree. Nobody needs credit cards. They are a new product in the history of money. They started in mid twentieth century. Then the banks figured out they could have people give them money (savings account) for 2% and they could give the customers a credit card and charge 10-26% interest to borrow the money on the credit card. The banks win, why do you think they have awesome buildings? Ramsey's advice isn't only for people who are out of control. Read The Millionaire Next Door by Stanley (I read before tuning into Ramsey)- none of these millionaire's said they use credit cards to make it big or by saving credit card points or airline miles, etc. I bet the above poster Ramsey doesn't have a credit card, just like me. I travel and use my debit card to secure rental cars (even pay cash at the counter), pay for plane tickets, hotel rooms, etc. Did you know that all of these places will also take cash? It is easy and no hassles. I will reserve the item with my debt card and then pay cash at the counter- no big deal. It is an urban legend that one must have a credit card to survive today. It is also proven statistically that when one uses a credit card (especially the wand cards verse swipes) they spend 10-50% more than if they had to count out cash. Think about it. If you went to the furniture store and had to count the 100s to pay for the couch, would you pay for the matching loveseat and tables? Cash hurts when you use it- you start thinking, do I really, really NEED this??? It is also very satisfying to save money and pay cash and never worry about the purchase again. If your house burns down and you loose your new couch the "90-days same as cash" payments won't follow you even though you no longer have the couch because of the fire! You would then use your insurance money for a new couch instead of paying off the old couch. It is also a fact that over 65% of people DO NOT pay off their credit card balances in full each month. As for an emergency fund, if you are in debt, Ramsey says start with a $1000 emergency fund, get out of debt then raise the emergency fund to 3-6 months of expenses ($10,000-20,000, for the average household). Think about it, if you didn't have any payments besides utilities, food and housing, how fast could you save up for $10,000 and now for $20,000? Pretty fast huh? it won't take years, maybe one, for most people 6 months. If you had $10-20,000 sitting in an emergency fund would you really need a credit card to catch your emergencies? For more opinions of living debt free/credit card free or the affects of credit read: Your Money Counts by Howard Dayton Credit card nation by Manning The overspent American by Schor The high price of materialism by Kasser Born to buy by Schor IOU No More by Burton Your Finances in Changing Times by Larry Burkett It's in the Cards: Consumer Credit... by Klein In addition to Ramsey's books.
15. Completely and unequivocally agree with him. Acting your wage is the only way to have any chance to secure your financial history.
16. I agree for the following reasons: 1) You're more likely to spend twice as much when using a credit card (so the movie "maxed out") 2) Several problems can happen. Credit card companies can change your terms and rates at the drop of a hat and some have been known to hold or lose your checks to have you incur fees. 3) Debit cards can offer the same convenience and some have rewards (and since it's tied to you bank account, you are forced to be more conscious). Our family is making the transition of being credit card free. We are spending less, keeping more and feeling financially great despite a new baby and some lose of work.
17. I disagree because credit cards represent 35% of your credit score. Without credit cards you lose 35% of possible points. I do agree however, that you should only use credit cards when absolutely necessary and try to pay off in the same month whenever possible. In order to keep your credit scores maxed you should never charge above 50% of available credit line on any credit card.