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Home » Credit, Credit Cards, Finance Guru Commentary

Forget Dave Ramsey, 5 Ways I’ve Used Credit Cards to Better My Financial Health

Last updated by on June 13, 2016

The Dave Ramsey Credit Card Philosophy

I know Dave Ramsey and many financial gurus would crucify me for saying this: ‘keep your credit card’. Key emphasis on the singular. Let me explain. The average American household credit card debt is $15,279 as of December 2013 – and the average interest rate runs in the mid- to high teens at any given time. Pretty scary stuff. So let’s just get rid of all those cards, CUT THEM UP!

On the surface that sounds great. And why wouldn’t you listen to Dave Ramsey? Without a doubt, if you have $9,200 in credit card debt, it’s time to cut those credit cards up. Many of us don’t have the composure and fortitude to use credit cards properly. But, it can be done, and using your card properly can be very advantageous. I’ll show you how.

You’re Wrong, Dave Ramsey. How to Use Credit Cards Properly and Reap Financial Reward:

  1. NEVER, ever carry a balance from one month to the next. If you do, cut the card. If you don’t, you’re never using your own money for anything. The credit card company might hate you, but so be it.
  2. Use credit cards strategically. There are 5% cashback gas cards and 6% cash back grocery rewards cards.
  3. Every six months, ask your credit card company for a credit limit increase of a few thousand dollars. You will never need to use these increases, but it will lower your balance to credit limit ratio, which will do wonders for your credit score. On the flip side, canceling longstanding accounts can hurt your credit score. You won’t hear that from Dave Ramsey.
  4. Find the right card that will give you actual usable perks and read the fine print.
  5. Only use your card to purchase necessities that you were going to buy anyways. These items include food, heat bills, electric bills, phone bills, and gasoline. This is where the financial haves are separated from the financial have-nots. If having that free pass in your wallet means you don’t hesitate to pull the trigger on luxury items that you don’t need, then a credit card is not for you.

dave ramsey credit cards

Not to mention, having a credit card also offers the peace of mind that you’re using someone else’s money, and if there were a case of fraud, you could dispute the charges and not be out your life savings. Take it from someone who has had money stolen from my bank account through a debit card – you should not feel safe using a direct debit card at ATM’s, gas stations, or anywhere else, really.

Credit cards can be a great thing if you use them properly. Don’t let Dave Ramsey tell you otherwise.

Update: I recently gave a better version of Dave Ramsey’s baby steps – check it out.

Dave Ramsey Credit Card Discussion:

What’s your take on Dave Ramsey’s view on credit cards? Do you think he is right or a little too dictatorial in his view on credit cards?

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About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Jennifer Ramsford says:

    Don’t listen to all the bullshit about credit cards. If they’re used incorrectly, their worse than the bubonic plague. But used properly, they’re an outstanding financial tool. Helped me countless times. Just pay down those card balances every month, people, and you’ll be fine.

    • jan says:

      Very true! I have two major credit cards with American Airlines and we pay off every month. And as stated only for basic things we would buy anyway like groceries, gas, bills and things we plan on buying and have saved up for. With paying off our cards, we have been to a European cruise and Australia trip FREE because of our miles with AA. Although, it took a good 2-3 years to accumulate it but if we paid cash for everything, this would have not been possible.

      So DR is correct in a sense that Credit Cards are evil only to those who succumb to the trap. But for the small percentage of us who actually are responsible adults, we can make it work to our advantage as what the author of the blog stated.

    • JM in San Diego says:

      My wife and I are in our 70s and we haven’t had any credit card debt in almost 25 years. We arranged a Home Equity Line of Credit (HELOC) for some home improvements — new roof, central A/C, patio paving, etc. in 1990. I noticed that if we paid off the credit cards, the interest would be about half via the HELOC, compared to what the CC companies were charging. I think the applicable term is “no-brainer.”

      Bye, bye balances!!! Then, we paid off the HELOC a few years later in a refi for lower interest. We paid the house off a few years ago, too, by liquidating my wife’s 401k.

      Everything gets paid on a monthly basis by automatic debit. Life is good!

  • stephanie says:

    Another great advantage to credit cards – they make tracking your spending super easy! I’ve never kept a budget, but I pay for nearly everything with credit or debit. I’ve been putting my transaction info into and tacking my spending, which is the closest thing to budgeting I’ve ever done. No need to write anything down on scraps of paper or save receipts for random $2 purchases that would otherwise be paid for with cash. For a non-budgeter (and lazy expense tracker) like me, using credit or debit appropriately is a great solution to keep track of money flow.

  • G.E. Miller says:

    Great point Stephanie. There are a few other sites out there,, and that have similar solutions. Even CC companies are getting in the game. I have an HSBC mastercard, and it gives me a breakdown via spend category.

  • Dave says:

    Great post, I’ve been observing all the points, minus #3 which I’ll have to check out. I completely agree with your post, credit can be a big asset for those who play the game the right way. By just utilizing credit for gas, groceries, and utilities.. you’re netting 2% or so back per year on those purchases. Seems like a no-brainer to me!

  • John says:

    I use a costco credit card for the same reason as you. I pay all my bills every month and have very little debt.

    But a word of warning for those using cards for the perks – you MUST pay the card off each month not even a day late. One day late and you will get that hefty finance charge and it will QUICKLY eat away at that rebate. I want a big rebate so I charge everything on my card – for a family of six no less… A month’s spending is alot. Missing one payment is costly.

    I paid one day late once in the past 4 years. I paid $55 for that privelege. That is 10% of my rebate because of my one day late payment. Ouch. Was it my fault? Absolutely.

    But my warning is this: When you say “use them wisely to get the benefit,” be aware that “wisely” is defined as “payment habits are PERFECT.” One single mistake is costly. That is exactly how the credit card companies have structured it and why they make money.

    Credit card companies are like casinos. The reality is that on average the house has the odds because they are based on analysis of human behavior. Credit card companies structure their rewards (and the finance charges) to make them money on the whole.

    But only a Credit Card Bambi is unaware that is is playing in the wolf’s hunting ground.

    Credit cards are a bit like bait. They look good. Those rewards are attractive.

  • G.E. Miller says:

    @ John – Very sound advice. A few things to add. I once was late on a payment with HSBC because I had not updated my notifying email address. I called them up to explain it was an accident, and they refunded the charge without hesitation. It never hurts to ask, even if it really is your fault. Also, for those interested in the Costco card, not only can you use the rebate to purchase Costco product, but you can straight up turn it in for cash.

  • Matt says:

    Just stumbled across this site. One thing you failed to mention is that it is infinitely easier to manage discretionary spending on things like food and entertainment using a envelope-based cash system, than throwing everything onto a card. Also, if you’re doing things right, you don’t need the good “credit score” that the credit card is supposedly helping you with. Banks have been just as successful convincing us that we “need” debt as Apple has with iPods, but it’s a lie.

  • Kitch says:

    I, too, believe that financial responsibility is the key when using any kind of debt. And the stat about Americans with a card being $9200 in debt is so misleading. This total was calculated by taking all consumers’ debt totals and dividing it by the number of people who said they have at least one credit card.

    The fact of the matter is the median credit card balance of those who even have one (40% of credit card users pay them in full each month, while a majority have no credit card debt at all) is $2,200. This means that half of users have a balance below this and half have more. Only about 8% of households have more than a $9,000 balance, and only 14% use more than 50% of the revolving credit card limit.

    What happens is the statistics are so negatively skewed by those who use credit improperly it makes it look like we are a nation of over spenders. I rarely use the credit card (don’t go over 10% of the available credit limit) I have and always pay the balance in full each month.

  • Domenick says:

    Any financial tool that involves the “withdrawal of” and “repayment of” monetary funds should always be used in moderation, just like with anything else in life. Bills and necessities as the article said, and also in my opinion are a very good use for credit cards. But like John said, make sure you make on time payments. They promote credit cards for nearly everyone, sadly enough we are not all wired to use them correctly and alot of people are putting themselves in uncomfortable positions.

  • Naptown Mike says:

    Dave Ramsey’s net worth is more than all of you combined. I’ll take his advice over yours.

    Warren Buffet has a credit score of 718, 5 points less than the median. Do you think it really matters to him? No, once you pay those cards off and save your money, pay off your cars (pay for the rest of them with cash) and pay off your home, your net worth will rise and your need to borrow money will be less. In time with smart investing, you’ll have a paid off home and a million dollar net worth. You’ll have a low credit score, but I guess some how you’ll just have to get by.

  • Wizard Prang says:

    I’m with Naptown Mike on this one.

    Bob Hope once said that “A bank will lend you money if you don’t need it”. Likewise a credit card is useful if you have the money to pay for it… which is exactly when you don’t need a credit card..!

    Dave Ramsey would probably castigat eme, as I have three credit cards…

    A Discover Gas Card, which I have had for some years but am about to cancel as the rewards have been cut back to the point where it is not worth having.

    A card that I have had for two years and used twice. Once I have used the introductory credit, I may cancel it.

    Another Discover card that I get a free GPS for signing up. Then it may get cancelled.

    In the long run I might keep one card (at home, not in my wallet), just in case we have a major (>$1000) expense, since it takes about a week to move funds from my savings (ING Direct) to my Bank. I also advise people to get a low-balance CC ($200 or $500) for online purchases, but generally I use my debit card for merchants I trust.

    Personally I prefer to make small purchases in cash rather than Credit; you know where you are with cash, and there are no unpleasant surprises at the end of the month. Also people spend more when using plastic than cash.

  • Jason says:

    You spend 12-18% more by using a credit card vs cash. So how are you 1-5% rewards helping you if you spend more? At McDonald’s you spend 40% on average. How are your rewards helping you?

    • Teri says:

      You make the most sense of all. Using a credit card is deceptive, because we spend more money than if we use cash. Everyone is missing Ramsey’s main point, that when you see cash leave your hand it hurts. Watching plastic swipe has little effect on us emotionally. I agree with you point, wholeheartedly.

      I have three credit cards, that I rarely use. Pay off each month when I do. But when I pay with cash…I hold onto my cash tighter than any credit card.

  • Wizard Prang says:

    You are quire right, Jason, but you misunderstand me.

    The Discover ONLY gets used for gas – nothing else – and even though I use plastic I still shop around and fill up as if I was paying in cash or debit card. And as I mentioned, that card is going to be canceled soon – when they reduced the bonus down to $5/month it became more of a liability than an asset.

    I have never used any kind of plastic in any fast-food establishment. Ever. Also, in Mickey D’s the figure is more like 30-40% extra.

    The point is that a CC is only really useful to those who do not need one. I think I am going to have to blog this one in more detail.

    Hope this helps.


  • Larry says:

    All can be done with debit card. Tracking spending etc… Then you never have to worry about interest.

  • Vic says:

    What about travelling? Most debit cards have a max of 2-3000. a day. What if you need more or just want to make a large purchase that goes over the limit.

  • Wizard Prang says:

    Good question, though I think you meant $300 a day not $3000. Most banks will raise your ATM limit temporarily if you ask them. I just asked mine and they said “No problem”.

    I carry cash or travelers’ checks for the expected expenses, and a Debit card for the little extras. I carried a high-value CC on my last three trips to England. I never used it and was constantly worried about it being stolen. The next time I will not bother.

    As for the “unexpected” huge expense, beware of impulsiveness! In my experience, people with CCs tend to act like they have more money then they actually have. “I can’t afford it” is just another way to say “no”.

    If you are traveling on business, the business should furnish you with a Credit or Debit Card. I do not pay non-trivial business expenses out of my own pocket, as I am not my employer’s bank. If they won’t trust you with a company CC, they can’t trust you to travel on business.


    By the way, I have closed the Discover card I mentioned above (see my blog for commentary).

  • Clay says:

    There is absolutely no proof of Dave Ramsey’s statement that you spend 12-15% more with credit cards than you do with cash. I can promise you that when I go to the gas pump and fill up, it will cost the same, when I grocery shop, I buy what I need, it costs the same. If you go to McDonald’s and get more than a combo meal, you’re a fat pig. Dave often quotes D&B about this more spend BS. Let me ask you, why would a Commercial Credit Reporting Agency do a study on consumer spending habits. It is also sickening to here a for profit radio show try to pass its self off as a ministry. I love getting the summary with my Amex Platinum Card that shows all my spend for the year, so I have backup for the IRS when I deduct the state sales tax from my fed income tax return, and I love getting into the Airport clubs when I travel, each club membership is more than my annual card fee. Besides Dave’s financial advice is cookie cutter at best.

  • Wizard Prang says:

    Let’s try that again, shall we?


    “There is absolutely no proof of Dave Ramseys statement that you spend 12-15% more with credit cards than you do with cash.”

    Have you ever received an unpleasant surprise when you received a credit-card bill? QED. Also, MacDonald’s did not install card readers at every point-of-sale in the nation out of the goodness of their hearts. They would not have done it if there would be no return on their investment.

    Common sense, people-watching and observing how Credit Card Companies operate, I find it empirically believable – not in every case, and the same may apply to Debit cards – but I accept it as fact.

    The most disorganized people I know and the ones who keep the banks and finance companies in business by living beyond their means use plastic more. The key to living within your means is budgeting. The key to budgeting is to set limits. And for most people the best way to do that is to work with a set amount of cash.

    Bottom line: Using plastic encourages people not to think about money and that leads to spending more.

    “It is also sickening to here a for profit radio show try to pass its self off as a ministry.”

    Profit and ministry are not mutually exclusive, and there is a difference between a ministry and a charity. Those who call Dave do not have to pay him. Besides, I have been listening to Dave’s podcasts for years now, and it hasn’t cost me a bean, but it has influenced the way I think about money and debt. How many lives have _you_ changed?

    Some people are disciplined enough to spend exactly what they intended, but there are also people out there who are unintentional and disorganized; they are the ones that Dave tries to help. If you don’t need Dave’s advice then don’t listen to him.

    Credit-cards are not inherently evil, but many CC companies can be and often are. Pay your rent late? We’l jack your rate. In a jam? We’ll jack your rate. Car repossessed? We’ll jack your rate. Owe us money? We’ll call and abuse you; we’ll also call your friends and neighbors and say nasty things about you¦ does that sound like good business practice to you?

    Bob Hope once said “A bank will give you money if you can prove that you don’t need it.” Likewise, keeping a credit card just for emergencies may discourage people from saving money just for emergencies.

    I am a fan of Dave Ramsey, though I have two Credit Cards. One has a credit on an online store; once used its gone. I received a free GPS for signing up for the other one, and that will be gone a year from now. Both of them remain at home except when I travel overseas. I never carry a balance. Having said all that, I do not recommend Credit Cards; there are too many people out there who desperately wish that they had never seen one, and I dont want to be accused of the financial equivalent of putting a drink in front of an alcoholic.

    I’m glad that your Credit Cards are working for you. Really I am. But using Credit Cards is a form of playing games with money. Some can do it successfully, many cannot.

    I recommend that you watch the Documentary “Maxed Out”

  • walt l says:

    Credit cards have provided me with $$$$ at 0% interest for past 1.5 – 2 years. I have used this moiney for checking accts that have paid 4-6%APY interest during this period of times. The secret of the 0% credit cards is pay of monthly requirements on the specified dates. Dave does NOT know it all.

  • naptown mike says:

    Walt, there are no zero percent credit cards. First understand how credit works, the bank does not “loan” you money. They create it out of thin air, manufacture a plastic card then put x amount of credit in a computer system in an account in your name. When you pay on that new money, that was never earned guess who profits 100%? Banks.

    If i give you 100 bucks, and you pay me back 100 then it’s even. If i create 100 bucks that i never had, and only created because you asked me, i give it to you, then you paid me back 100, I’m plus 100. That is how it really works, banks don’t loan money they create it out of nothing then charge interest.

    Even if you don’t pay a dime interest they still make huge bucks because the money they loan never existed until they received your credit application. Yay you invested 1000 bucks of “their money” and got 60 back…but they got 1000 of your dollars at 100 percent profit. Good job dude.

  • Jeff says:

    After being $20k in credit card debt (got one early in college…a trip here…an engagement ring there…you know the drill), we’re one month away from paying off our last credit card. I canceled (GASP!) my MBNA platinum with a $40k limit. I held it for 10 years…didn’t miss payments…$1,500 credit line went to $40k over that time (amazing). I cut it up…canceled it and thoroughly confused the guy with the headset over at MBNA.

    I’ve been through Dave Ramsey’s FPU…we’ll soon be debt free but the house…credit cards aren’t worth messing around with. The extra $200 a year at Costco isn’t enough to warrant carrying those stupid things in my wallet again.

    Debit card or cash…ahhh, the simple life.

  • Wizard Prang says:

    Well done, Jeff. Just wait till you get to that first month without payments! FREEDOM!

    Funny how canceling a CC can actually _lower_ your credit score… a score that is raised by getting in debt and staying in debt. But I guess that is another symptom of how screwed-up the system is…

  • Susan Weibel says:

    One of the comments above (written ironically by Dave) says, “credit can be a big asset for those who play the game the right way.” And yet Dave Ramsey, whom we are supposed to “forget”, assures that if you play with snakes long enough you are going to get bit. I wonder how your credit assisted wealth portfolio compares to Ramsey’s cash fortified portfolio? You are earning $200 a YEAR on your card? Come on! That’s like 2 weeks of groceries. And according to credit usage statistics, you are overspending by at least that much when you use plastic rather than cash. Your assertion that you are using “other people’s money” belies that you have been deceived, as well. When others put money up for you, a repayment (of your money) is demanded. Until that payment is made, you are a slave to the lender. You have not only surrendered your own money when you swipe that card, but your security as well. If anything should go wrong, your good credit score will not be cause for the snakes to have pity on you, trust me.

  • Shaun Connell says:

    I keep a credit card — and pretend I’m writing checks instead of actually using “credit.” By documenting my use of the card on paper, I make sure not to “bounce” the credit card by spending what I don’t have. This way I’ll always be able to pay it off.

  • Vic says:

    Isn’t it miserable that those of us saving cash get a miserable rate of return? How did the banks get away with this? Answer: People didn’t make one yelp.

  • Wizard Prang says:

    One part of the problem is that we are not conditioned to ask questions like “what exactly are the $2000 of closing costs for?”

    Another part of the problem is that over the past twenty years the banks have gotten to write their own laws. 🙁

  • Do You Dave Ramsey? says:

    Ha… I love the great credit card debate rampaging through the blogs… everyone has an opinion (as they should) and some are actually pretty good.

    I imagine I’m “supposed” to be against CCs altogether because I’m invoking the name of Dave Ramsey and that’s mostly true.

    However, I’ve not been able to fully kick the habit. But I won’t bore you with justifications because I think even the best executed of the justifications just ring hollow.

    Clearly that’s just my opinion but that street runs 2 ways… right?

    So I’m not ready or willing to remove the training wheels, ok, I’ll admit as much but I won’t call CCs a profit source like some claim to with the miles or points or even the ridiculus 0% balance transfers into a savings account…gag.

    But I love the discussion and arguements and appreciate reading your perspective and sharing mine!

    Keep up the great work!

  • d fine says:

    As far as Costco and AMX getting $200 back. I got back $211 and used my Visa DEBIT card in the executive Membership!

    Yes if you pay your card off early and don’t get hit with a late charge when they hold your payment. Yes you can do it.

    Now you seem to be talking out both sides of your mouth. You say you use their money and do not have debt as you pay them off on time every time.

    Ok, then tell us, you said you were concerned about your credit score and how you kept it high.

    If you don’t use debt and barrow, why do you care?
    Why is the FICO so important to you?
    Good FICO won’t get better Insurance rates than Zero. Now a bad FICO score will, but not zero. So why do you care?

    Last Point. The FICO score is not a credit score. It’s a fools DEBT SCORE!

  • rana says:

    I love your blog.I have to agree with you that it is best to use 1 credit card only and to use it less often.

  • Wizard Prang says:

    I am a big fan of Dave Ramsey, but they one area I disagree with him is in the area of Credit Cards. But then I am not a typical customer – I don’t play games with interest rates, I never carry a balance, and I have never taken a cash advance in my life. Let me give you a few reasons:

    Firstly, CCs give you certain statutory protections that Debit cards don’t – the banks choose to treat them the same, but they don’t have to, and they can withdraw that “courtesy” at any time.

    Secondly, With a CC transaction, the bank owns the goods until you pay for them. With a Debit Card transaction, the money has already left your account. In the event of a dispute, whose money do you think they will work harder to protect – theirs or yours?

    Finally if your information leaks – and statistically it either has or will – which info would you prefer to fall into the hands of an underground hacker mob – a CC number or the keys to your bank account?

  • Wizard Prang says:

    I can’t edit, so let’s try that again…

    A more thorough treatment can be found on mymy blog. Sorry for the plug, but this is relevant.

  • Coles Myer says:

    I’ve always felt good when I use my credit card, it gives me the feeling of control. I always have control of my credit card use. Good job with this post for giving your readers tips and ideas to better their financial health.

  • Evgeniy says:

    I too had some cards, but now at me only one. I consider it is necessary to be able to plan the expenses. And to try not to use credit cards

  • Greg says:

    Cash is king, debt is not good in any form. If you play with snakes you’re going to get bit. You spend more when using credit, and by the way, you are protected like a credit card when using your bank card. I’ve had no credit cards for five years and have had zero problems. As for the 200 hundred dollar rewards, man that will really change your life. Mess up once with the credit companies and then you’ll agree with Dave Ramsey. Get on a budget, use cash, pay off debt, invest, you’ll be better off than wasting energy fooling with credit cards. By the way, since I’ve been using cash for cars and everything else I buy, not once has my fico score come up. Don’t know what it is and don’t care. You are slave to the lender.

  • Daniel says:

    One argument for not using a credit card is that when you pay with cash you have an opportunity to negotiate a reduction in price from the seller. For the seller, the cost of doing business includes expenses they pay to the credit card companies for each transaction. If you pay in cash they can sell you the same item for a discount and still come out the same or better on the deal. This won’t work everywhere but does factor into this discussion. I for one use a credit card on normal expenses and pay them off each month but when I make a big purchase I ask for a discount by offering to pay in cash. Typically, this will save me more money that the miles I’ll get through the credit card company.

  • Gilbert AZ CPA says:

    One other option…cut up your credit cards. I would agree that having a credit is great if used wisely. The problem is that most folks won’t heed the advice and will end up running themselves into debt. If you can’t keep your spending under control this may be the best advice.

  • Ida says:

    Regarding #3, if I ask for an increase in my line of credit and the credit card company turns me down, will it adversely impact my credit history or credit score?

  • CPA Marketing says:

    Sure…credit cards can be used effectively. But the reality is that most folks won’t use them wisely. What should you do…just cut up the cards.

  • Ashley says:

    I put EVERYTHING on my credit card including my electric bill all groceries, etc. and then pay the balance each month (between $2500 & $4000 per month). There are many people, myself included, who know how to use the card responsibly. I get a 1.5% rebate at the end of the year. Why wouldn’t I use my credit card with a reward like that.

  • Wizard Prang says:

    Your conclusion – that people make smaller purchases with cash and larger purchases with credit, and that using plastic does not make you spend more – is fundamentally unsound and unbelievable.

    Has anyone here ever opened a CC statement and gotten a nasty surprise?


    *Crickets chirping*

  • G.E. Miller says:

    @ Wizard – not sure how you came away with that conclusion from reading this post.

  • Wizard Prang says:

    I was replying to the comment preceding mine. Sorry if I did it wrong…

  • Matt says:

    From my understanding, credit cards still have much more protection than a debit card. If some mistake happens with a debit card that money is gone from your checking account. I know you can dispute it but the time to resolution varies by bank/CU. The discipline factor is huge with credit cards but ultimately they are very practical if one is disciplined enough to use them right. The best thing to happen to me is the Amex I have to pay off every month.

    I know the Dave fanatics won’t understand but since when did right-wing Christians ever think for themselves?

  • not real says:

    glad to know that you’re brainwashed to the point that you beg for your indebtedness.

    1) except studies show consistently that the vast majority of consumers don’t have that kind of self control
    2) having multiple credit cards is good for your credit score actually.
    3) actually you do hear that from ramsey. but if you don’t use debt then your credit score doesn’t really matter does it?
    4) you pay for those perks a) most likely you will incur fees by keeping a “free” credit card b) consumers as a whole using credit cards means increased prices 3) you have to deal with the hassle of managing points and other nonsense.
    5) right, only smoke crack on wednesdays. got it.

    i was like you once… until i realized that the rich don’t use debt; the poor do.

  • Natalie says:

    I do believe that there are some people who can use a credit card and not spend a dime extra and benefit from the rewards, however, they must be in the minority or the cc companies would not be profitable. People who use credit perfectly are the exception to the rule. My mother is one of those people. I thought I was one of them also until disaster struck.

    When I finished college I thought I was doing the right thing by buying a sensible car and having the right number of credit cards. My credit score was great and I was a happy camper. A short time later I was unemployed and quickly used the few thousand of savings I had amassed making 25k/year. I turned to my credit cards to pay my rent. If I had not done this I would have been living on someone’s couch. What I did made sense at the time, but I payed for it for years.

    I wish I didn’t have the credit cards as an option. I’m just now getting in the black financially, meaning a positive net worth and I will never again use credit cards. I don’t care if I don’t have perfect credit because I don’t want to use it. I’d rather not have the option. I will pay cash for my next car and contrary to popular belief, it is not necessary to have a good credit score to buy a house. They look at your whole financial picture, not just a score.

    I get around the issue of not having cc protection on purchases by having more than one checking account. The account I use for purchases is separate from the account I use to pay bills. I make sure that my bill pay account has a nice cushion and I make purchases from an account that has just a couple of weeks worth of spending money in it. I make sure that I have overdraft turned off and if I don’t have enough in my account, oops!, I can’t make the purchase. This helps to protect me from overspending on accident and from thieves having access to my main account with my mortgage money in it. If you don’t have enough money to put your checking account for holding fees on car rentals and hotel rooms, you probably should be taking a cheaper vacation.

    I wish I had known 10 years ago that having a good credit score doesn’t mean that you are financially sound, it just means you have more options to be irresponsible.

  • Tomsquatch says:

    You pro credit card people sound like crack heads! Our society has truly been shaped by “Big Banks”. You are allowing the credit card companies to justify your fiscal laziness. The statement “I always pay it off at the end of the month” doesn’t make sense to me. Why not just pay for it with the money you have? Why pay interest on your purchases, it’s like a double tax on everything you purchase. Plus, if you always pay it off at the end of the month it doesn’t really help your credit score. All the reasons that have been given to keep your card are crazy. Today’s reality is, If you use a Visa debit card you have the same protections as an unsecured credit card now, and they will refund your account in a day in the event of identity theft. Most banks now offer air miles and rewards for debit cards, so why do you need to charge it.

    If you all take your comments about how smart you are with credit cards and change it to “crack”, you would probably feel different about CC’s. The business of credit cards are not to help you build wealth! They are in the business of MAKING MONEY OFF YOU! It’s like the casino’s, the house will always win. Why do you all feel that you are smarter than the banks with their money. They have complete control over you and they are so good at it they are making you the head of their fan club?????

    Get away from the crack pipe and come the realization that you can make it without credit cards. It doesn’t matter if you agree with Dave Ramsey or not. It’s not that hard of a concept to understand, be an adult and responsible with your money. If you want something , save for it and pay cash. If you do not have the money for it, then you probably do not need it.

  • Mac says:

    Again, how many of those commenting on this article are paid employees of credit card companies?

  • Paul says:

    Dave is focused on getting you out of the middle class and into real wealth. No millionaire ever says that they got where they are on credit card rebates. I guess it’s a matter of what each person considers a prize and how big their horizons are. For millionaires their prizes are much much bigger. It’s how valuable your time is. The hour someone might spend clipping coupons, a millionaire spends that hour working on the next million. Dave reminds us of the mantra of the middle class, “build your credit, build your credit.” Wealth is 80% behavior. Behave like the wealthy, it’s how they got that way. Debt is never a good thing. They got wealthy and stay there partly by paying cash for everything including not having new cars or car payments. The wealthy got there because it’s in their DNA to not put their money into things that are a guaranteed loss, like new cars. They will take gambles, yes, but no guaranteed losses. Guaranteed losses are for the poor. The truly wealthy don’t rely on credit for anything so they opt to put a freeze on their FICO score. Someone could certainly try to pretend to be Dave but the identity thief better pull out cash cuz Dave doesn’t score high enough to buy a coke. Dave has no credit score because it’s not a measure of wealth, it’s a measure of how good/bad you are at jumping through debt hoops. The good ones get their prize at the end while the guys who run the circus are literally going to dinner in their helicopter. One of the cc company CEO’s years ago said it’s one of his favorite ways to go out depending upon the proximity of the helipads to the restaurants in NY.

    • G.E. Miller says:

      @ Paul – I actually agree with everything that you said. But if I can get 2% back on my food and utilities and occasional purchases and my consumptions habits are not impacted by the ease of cards vs. cash, why wouldn’t I do that? True, millionaires don’t worry about 2% rebates, but when you’re not a millionaire, every little bit helps. Credit cards purchases are not actual debt if you never pay interest on them.

      • Mark says:

        Weak sauce bro, there are debit cards that give you 2% back on your purchases. I think it is great that you already agree with everything paul has said because he is right… its ok you don’t have to keep defending credit cards, we all know that you don’t really believe in them 🙂

  • Joe says:

    What a bunch of crap. You never hear of millionaires talking about how using a credit cards becuase of the 2 cents they save on gas and stuff. How much is your net worth? $20?

  • Joe says:

    To all the credit card company employees commenting on this, please keep lies on your own web site. Lets remember what caused this financial crisis. I seem to remember something about debt in there… Hmm… Debt = Economic Crisis = Let’s Get Credit Cards? Idiots.

  • Independent Investment adviser says:

    It seems that if you can handle credit cards as tools, without carrying debt, then you are in control.

    Conversely, if you fall into the camp where you use credit as a substitute for money you do not have, and you build debt, you are the one being used.

    It certainly sounds as if YOU are in the first camp. Unfortunately, so many are in the second. The whole nation seems over-leveraged!

    I like your take.

  • Sean says:


    I’m late to post, but I’ve been listening to Dave Ramsey’s podcast for a few months now, and I agree almost 100% with everything that’s said. I like the material because it’s simple, straight-forward and makes sense on every level.

    Not only that, but the arguments against Dave Ramsey’s philosophy pretty much boils down to “if I can do it, why not?” That’s weak at best. Dave Ramsey’s idea is to get people to focus on building wealth as opposed to (as someone else said) wasting your energy with 2% cashback rewards, etc.

    On top of that, using credit is just layers added to your life. Why maintain more complexity to your already complex life by adding more variables you need to keep track of?

    As a “right wing Christian”, I guess some think that I don’t think for myself, but again that’s an emotional generalization by people who don’t know any better. How many situations could people avoid by listening to the wisdom of others who have been in a situation and found a way out? Wouldn’t that be better than people having to re-learn the lessons of those before them?

    I’m a web developer (so I guess that means I think a LOT, huh?), and I have been learning a lot of lessons from the open source movement. One lesson is the importance of building on other people’s work. If I had to re-write the same routines, functions and classes for every project I did, I would be far less effective than re-using someone’s well written, thoroughly tested code library. I look at it the same way with taking Dave Ramsey’s advice. I don’t have to go through bankruptcy multiple times (or even waste years messing with “cashback percentages”) to know that I don’t need that noise in my life. It’s a waste of time and mental effort, and it keeps you “on the grid”.

    I love Jesus and I love keeping my life simple.

  • Kyle says:

    How many of you have been a millionaire, lost all of it, proceeded to regain it just to have an estimated net worth of 20 million? Say what you will about his philosophies, but he’s banking on plenty of americans sheer stupidity to buy things that you can’t pay for..

  • Christopher says:

    I want to know that net worth of the author. Because I only listen to the advice of millionaires and every millionaire I have asked advice of said to get out of debt and ditch the cards. I you want to be rich you have to do what rich people do, because they know what they are doing. Duh, they are rich.

  • Sandra says:

    I just read Daves book and I agree with kyle and Christopher

  • Jeff says:

    Have you ever heard of a debit card? It will do accomplish all the reasons you believe having a credit card is better than not having one. Not to mention, unless you opt in to allow your bank to let you overdraft, there is a 0% of you going into debt with it. Kinda simple huh?

  • Duane Erion says:

    2 things to consider when arguing “why credit cards are good”.

    1) Credit Ratings are irrelevant if you don’t borrow money. Many of the “pros” of having credit cards is that if you use them correctly, it can increase your credit score. The purpose? – to borrow money. Dave Ramsey’s philosophy is to not borrow money, which makes that argument irrelevant.

    2) A published study by Carnegie Mellon, Stanford and MIT proved that our brain experiences more pain when paying with cash vs. credit card. A Dun and Bradstreet study verified this by showing that we spend 12% – 18% more money when using credit cards over cash. So I commend you for getting that 5% cash back with all of your credit card purchases. Too bad it cost you 12% – 18% more in spending to get it.

    Use a credit card for the convenience, just don’t try tell yourself you are saving money.

  • Matthew says:

    Peace of mind does not come from “using someone else’s money”. Peace of mind comes from being debt free. The premise is wrong, your not using someone else’s money you are paying for it. Credit cards give you a false sense that you are not using your money, so in turn you will spend more. “On average you will spend 12-18% more when making a purchase with a credit card.” (Dunn and Bradstreet study)

  • MiMi says:

    “On the flip side, canceling longstanding accounts can hurt your credit score. You won’t hear that from Dave Ramsey.”

    I just wanted to add that Dave Ramsey HAS stated that if you pay off old debt that your credit score may fall. His view…who cares! You’re getting out of debt! That’s the goal so that you don’t have to rely on the credit score to borrow money! Just sayin’…

    • Mark says:

      I just heard Dave on the radio the other day counsel a woman to cut up her cards despite the fact that it will hurt her credit score. Who cares about a credit score? A few months ago I purchased internet for my house and they had to do a credit check. Because I don’t have any credit I couldn’t do payments on my equipment. Seriously I didn’t care that I had to pay $100 for the equipment, I planned on paying in full anyway. The bank I use doesn’t even consider your credit score for home loans so why do I need a credit score? I have never had a credit score so from what I have observed from family, friends, and late night television is that it is something you need to try and convince yourself that you are not an idiot for going into so much debt. Look at me guys, I will make payments for the rest of my life to someone else for stuff I can’t remember, but look I have a high credit score!

      O man I could go on and on 🙂

  • Dan says:

    point 2 and 3- Dave doesn’t worry about the credit score because he wants to keep people out of debt, so these points seem not to stick as arguments against his method.

    point 4- Dave links to a 2% cashback debit card on his website, which is higher than the 1-1.5% example given in your article.

    point 5- Dave believes that even if you’re using others’ money, you will spend more with plastic than with cash. So even if you’re just paying for the essentials, the temptation to overspend on them and on other things are there.

    Sensible sounding advice in your article, but I like the experience driven method of Ramsey. My $.02, thanks for the food for thought

    • Dan says:

      P.S. In his book whose cover you show a picture of, he makes a comment on the security of using a debit card. He asserts that Visa has made it very similar to dispute a debit card transaction as compared to their credit cards.

  • Lida says:

    I see that you have a lot of haters, but I definitely support what you’re saying. I’m taking the Dave Ramsey class right now, and I do think there is merit to it, but it’s more for people with no control… which just happens to be most people. If you spend money like crazy, then his mindset works well, so most people think he’s God, or close to it.
    Anyway, I treat my credit card as if it were a debit card, and thus, I get rewards for things I was going to buy anyway, and had the money to buy anyway. This is exactly what you’re saying, and I’m not sure why people are offended… You’re actually trying to help. (Plus, you’re right.) But hey, if they don’t want your help, it’s their loss. On the flip side, there are people out there who are taking your points into account, and so I thank you for your input!

    • Jay says:

      You say he’s just trying to help. I think most of us commenters are thinking if you want to help people in financial trouble why not go help people in financial trouble rather than taking jabs at someone that IS helping people in financial trouble.

      I probably owe my marriage to D.R.’s advice. I’m not an irresponsible person, but I did get my financial habits from my parents who were irresponsible financially. I’m not saying that every human lacks the ability to control his/her self with a credit card. I’m saying look at the average U.S. financial statistics and you’ll realize that the majority of people DON’T control themselves.

      D.R. is hitting a larger number of targets by targeting out of control spenders than he would if he went after the tiny fraction of people who use their plastic wisely.

      But if you’re really into rewards you should check out perkstreet online banking. I got back $800 cash this year.

  • Bob says:

    Borrowing someone else’s money is ALWAYS a recipe for disaster. It amazes me how many people don’t get this. Debt is financial slavery. Plain and simple. And credit card company’s wouldn’t make any money if the majority of their customers never carried a balance. They make money based on people’s irresponsibility with money!!

    There are a few out there who do a fine job of paying off their debt every month. Good for them. But I will never borrow someone else’s dime ever again. Credit is a scam. Ever since I have followed Dave Ramsey’s plan, I have gotten out of debt, I got money in the bank, my equity has gone up ten fold, and my stress level is much lower knowing that I don’t borrow money. I work hard and pay for everything outright. It’s a good feeling knowing that I don’t ever have to concern myself with borrowing someone else’s money.

    Plus, Perkstreet offers 2% cash back on all purchases with your debit card. I’m on track for about $600 cash back this year and I don’t need to borrow anyone’s money to do that!

  • Danny says:

    Dave Ramsey’s advice saved my marriage and took us from six figure debt to seven figure wealth. His advice is solid and seeing that he’s a millionaire, I’ll stick with what he says.

    Argue all you want, but you realize that 2% of the average household’s expenses is only going to be about $600 right?

    Thankful for my lack of a credit score,


  • ERHR says:

    It looks like you got beat up a bit in the comments here, G.E.! But it’s an aggressive post title so I guess that was expected. For what it’s worth, I largely agree with you. I read Total Money Makeover and didn’t find it very helpful (and actually laughable in places), especially as someone without any consumer debt!

    Post-college, I didn’t know yet if I could trust myself with credit so I had one credit card that I never touched and used debit for everything. After three years I believed that I had sufficiently trained myself to never spend money I didn’t have, so I switched to using a good cash rewards credit card. 1.5 years out and I have used my credit card perfectly (I actually pay it off several times per month to keep the balance low) and have enjoyed shifting my occasional redeemed rewards to my “Travel” savings account.

    I’m not sure about this argument that millionaires don’t worry about getting a few percent back in rewards. I don’t know any millionaires personally, but from reading The Millionaire Next Door I definitely got the impression that real millionaires are frugal. To me, using a rewards credit card (as long as you never carry a balance or are charged any fees) is part of being frugal. I can definitely see that someone else would consider using cash frugal if they know that they can’t be trusted with credit cards.

    While I believe that people will spend a bit more on average if they use plastic instead of cash, I also know that there can be anecdotal exceptions. In our budget, the majority of our spending is for fixed expenses and we have caps on spending in every discretionary category. I am so strict with my spending that I really don’t believe using cash would make a difference.

    I agree with Dave that for many people credit cards can be damaging and that if you are in consumer debt the best thing you can do is switch to cash or at least debit. I also agree with you and many posters that some people in some stages of life can use credit cards to their advantage and not get “bitten.” I have demonstrated that principle and will continue to practice it – but you better believe if I ever see myself slipping into revolving debt that I will cut myself off from my cards, rewards or no.

  • Nick says:

    don’t use credit cards, these arguments are totally ludicrous and wrong, for a finance guy its amazing you could even suggest these actions.

  • Float My Mortgage says:

    Finance guys suggest this, because this is what finance guys do all day – arbitrage. Credit cards are a tool like any other. For example, you can use them to pay your mortgage many months in advance. Get a 0% credit card for 18 months, pay the mortgage onto a credit card (for a 2% fee) and save on your after tax mortgage rate (e.g. before tax rate 4.5% (not everyone has refi’d yet), after tax deduction your rate might be 3.5%). Pocket the difference (3.5% minus 2%) = 1.5%. Just remember to pay it off in 18 months 🙂 It’s what the bank’s do all the time, just in reverse. Works well – it’s a legit tested method, that no one else is teaching that we’ve seen.

  • Float My Mortgage says:

    @Jay – I hear your concern, but think it depends how you use it. Let’s take your job loss scenario.
    You happily have a job and get a 0% credit card for 18 months, you add a mortgage payment (say $1000) to the credit card. You only need to make the minimum payments (say $50 a month) which you should definitely do *automatically* (have to be organised not to miss a payment). You have an extra $1000 in the bank account, which earns you 1% for a 18months (not much but that’s the current savings rates).
    Then you sadly lose your job. At that point you have the cashflow (from the bank account) to pay the first month mortgage payment, after your last paycheck stops. If you did this a few times, you may have enough time to find another job (e.g. 3months to 6months). Admittedly you may need to compliment this with your previously saved emergency money fund (to be conservative) but you would have a 1 year to recover. However it can be a good way to “float” mortgage out for a year or so (if you have “lumpy” cash flow). Obviously if you miss payments and dont manage it responsibly it could be a train wreck, but like all tools – it’s how you use it. It could definitely be used to “bridge” between jobs. Smoothing cash flow is just one use of floating your mortgage (far and away the best one is paying down extra principal a year or more in advance, that can really accelerate the mortgage, but here we talking about using it as a “bridge” between jobs).

    Like any credit management – this only damages your credit rating if you do it irresponsibly (e.g. at high % utilisation). Bank’s lend you money for credit or your mortgage all the time, this is just doing the reverse back to them. People have buy loads of stuff (they don’t need?) on credit cards – why not use it to further your financial future by accelerating your mortgage? At the end of the day – it’s just a tool.

    Thanks for the comment.

  • Dennis Patrick says:

    It’s entertaining to see all these sheep flocking towards their finance idol’s defense.

    No mere man should EVER be followed to such extremes.

    I mean the fact people are saying you pay more to buy food at Mcdonalds with a CC. Really? I don’t remember seeing a “Cash” payment option that’s less than Credit.

    Oh it’s the interest charges? Pay the damn balance in full every month and there WONT BE ANY. You wont have to worry about a “job loss” because there wont be any balance hanging around.

    It’s pretty simple! Just because a lot of people (including those in here ranting and raving) can’t handle a CC responsibly doesn’t mean it’s impossible.

    Connect all of it to Mint and everything goes straight to your spending budget. Your balances on the CC’s look like money that’s already been spent. Because it has been.

    I guess you guys can afford to throw away all the cashback rewards, because you can’t trust yourself not to screw up. I on the other hand will take all the extra $ I can get for doing absolutely nothing. If it’s something rich people have shown me, it’s that you take all the money you can get for doing nothing that’s available.

    • Jarron says:

      I don’t think “finance idol” is fair. I personally know 10 families that have been helped by his advice, I don’t know any that have been helped by yours. My family went from six figure debt to seven figure wealth using much of Ramsey’s advice.

      People like us who know his advice works, worry that people like you will drive off the very people that desperately need his layman style help.

      Your third paragraph – You’ve apparently misunderstood something. McDonald’s own research showed that people bought more when paying with plastic. It didn’t specify CCs, but plastic is plastic.

      You look at the average American family’s debt and tell me if you think most of these people are financially sophisticated or mature enough to ensure they pay their balance each month. Sometimes people need a good slap in the face to make them see the obvious and THAT is Mr. Ramsey’s specialty.

      Concerning your last statement. That doesn’t match up with the information the researchers of “The Millionaire Next Door” discovered.

      I’m not picking a fight. I won’t come back to see if you responded, but it’s ridiculous to try to make the world that black and white:

      A) You have a brain, carry no balances, use debt like there’s no tomorrow.

      B) You’re a tardfish slob that deserves to be in debt. It’s a wonder you’re smart enough to turn on the radio to listen to Dave Ramsey.

      It just doesn’t work that way. Have you ever listened to the show? It’s been a while since I have, but there was one day a week that people would call and state how much they had paid off and in what time frame. Most of that was attributed to Ramsey’s child-simple advice. If you don’t feel good for those people then you’re a cold, cold rock anyway and I’ve wasted my time.

    • FloatMyMortgage says:

      I think the point is credit cards are a tool. If you cant handle money responsibly then MAYBE dave ramsey’s zero credit card policy IS correct for people who have a history of rolling balances and staying in debt month over month (credit card debit handled badly is probably one of the worse things in the financial universe, it’s compound interest compounded against you every month!).

      What is right for one person is not right for all. However if you are going to go the credit card route you need extra discipline (eg monitor on, always autopay balance in full).

      You can definitely make money with credit card route though. Real example: get chase preferred card (no link we dont need the kick backs :-), spend $3000 on it in advance mortgage payments (likely cost to you $125), get $500 cash back. left with paid mortgage several months in advance plus $375 cash ($500 cash back minus $125 fees) for one credit inquiry. It is possible but it requires work (although likely pays about $125 an hour in this case!)

  • Blair says:

    I agree that credit cards are not all bad. If used properly they are a nice tool. They offer more protection than using cash, and you earn rebates if paid off before the end of the grace period.

  • Chloe says:

    G.E., fantastic article.

    A lot of the negative reviewers on here that are saying all credit card use is bad remind me of the school days-scenario where a bunch of the students say “We shouldn’t have the homework counted because NO ONE had time to do it!” They fail to notice the other percentage who raise their hands to counter, “Actually…”

    Just strive for self-control, people. It seems immature to project your tendencies on the rest of the population. If you start splurging on things you don’t need, by all means don’t use credit if you find being careful with it is hard for you. Just please don’t make the ‘I can’t help it..that’s just the way ALMOST EVERYONE is” statement. It simply isn’t true.

    I’m not a big online reviewer, but I felt compelled to this time because of all the rude comments on this intelligent and well-written article.

    By the way, I actually find I spend MORE money when I use cash, because it’s like water through my fingers..once it’s spent it’s just gone. With a card however, I have to see a record of my purchases later 🙂

  • Gary Jorgensen says:

    I want to comment on the use of debit cards. I believe the banks that issue debit cards are just as bad as the banks that issue credit cards. First of all, it is NOT true that transactions will not go through if you don’t have enough money in your checking account. I have seen it happen – if you have 20 bucks in your account and you use the debit card to buy something for 25 bucks, they LET the purchase go through and then charge you for insufficient funds. What makes this even worse(and again I have seen this happen), lets say you have a 25 dollar charge, and two 5 dollar charges in the same time frame. The bank will purposely take out the 25 dollar charge FIRST – then they will charge you insufficient funds charges on the two 5 dollar charges also, instead of taking the 5 dollar charges first.

    Look – the banks make SO much money on fees and charges, that it motivates them to do these things – debit cards are no better than credit cards.

  • Roxanne says:

    I would like to know what credit card company is recommended, I see a lot of great kick backs from all the company’s but not sure what the most common company is excepted the most, visa, mastercard, discover or American express?

  • Jonny Debt says:

    Yes I do you think credit cards have their place especially if you can get a cashback credit card from which you pay down the balance at the end of each month.

    I’ve done this for 10 years and received probably about $1000-$1500 in cash back rewards.

    So it’s about using credit cards to your advantage wherever possible without incurring interest charges.

  • Jon says:

    Dave Ramsey has no understanding of anyone who makes under 50k per years. Everyone who gets out of debt on his show is like making over 70-100k and proud to be getting out of like 30k of debt. Lol. Basically white privileged middle class idiots. He has no understanding of reality. If you have 200k in medical bills and you earn 45k working two jobs he has nothing for you. In fact he will in subtle ways insinuate your debt is your fault. That’s his schlock. Basically if you are a rich moron who buys a boat he can’t afford Dave Ramsey is your guy. And he is proud of this. He’s proud to be that. Not a Christian in my opinion. Not a Christian.


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