I agree with Ramsey on most points, but not this one. If you are disciplined enough to use a credit card then you can beat the system and get a small amount of money back. Also, how can you build credit to get a good home mortgage interest rate if you don't use credit cards? I sure don't want to buy a TV, furnature, or a car on credit and pay interest! Credit cards are practically the only way to build credit rating without paying interest. I've used credit cards for 10 years and never paid a dime of interest. I get 1% back on everything, 2% back on groceries, resturants, and entertainment and 5% back on gas. My wife and I just bought a home and got a 4.7% interest loan (20% down 15 year mortgage) all because of the credit rating built from using credit cards. Ramsey assumes that everybody is not disciplined and incapable of self control and I think he's wrong on this one.

Mark March 16 2010 3:23 PM

My parents love Dave and his lessons and my school even has a class using his financial peace school curriculum. We just finished talking about how evil credit cards are and I now never plan to own a credit card. Thanks Dave.

Phillip March 15 2010 7:36 AM

Most consumers aren't at the point yet where they have the option to not use their credit cards and rely exclusively on cash. It takes a lot of motivation and education. Courses like yours offer both. My company is currently participating in the 13-week program. The feddback is that it is awesome.

Lillie March 09 2010 8:03 AM

I do agree with you what you are saying because i have been in the Company and it is good to joined it as well, and i want us to be serious about our Business and see where it lead, I have been using my Credit card and debt, And i guess when the money is going into the account.....i wish we need money to open it away for the manger... I am glad about you,

John Cark March 01 2010 9:00 PM

Does closing your credit cards drop your credit score? If so, how much?

Tammy February 27 2010 10:51 AM

You can get debit cards without overdraft protection. When I opened my accounts I declined overdraft protection on my checking and debit cards. I'd much rather feel the discomfort of the money leaving immediately with the use of a debit card but have peace that there is no debt, than the pain of credit card debt and messed up finances.

Karen February 27 2010 7:56 AM

I think that this is an area where Dave and I would agree to disagree. The word here is DISCIPLINE. If you are disciplined enough to slog through the baby steps without fail, there is no reason to believe that one cannot be disciplined to use a CC safely. We purchase items on the web, which I consider risky. They are items that we budget for during the month and have the cash to pay the bill in full. Those "dollars have names" just like the others in our budget. I posted a similar post in the Debit Card area. We tried just using a debit card for a while, but we found that when our numbers were stolen that the bank issuing the DC acts the same as the bank issuing the CC. It can take up to 60 days to investigate fraud. The CC company will not charge for the item or add fees or interest during the investigation. The DC bank may not reimburse the funds to an account until after the investigation. In our position (debt-free for 30+ years, 1-yr emergency fund, etc...) a few thousand $$ missing for 60 days is an inconvenience. For someone barely making it in the middle of their debt snowball is catastrophic. Also, if a DC is used like a CC and the user charges more than what they have in the account, there are overdraft fees, possibilities of bounced checks, etc. Also a catastrophe. I'm not advocating everyone running out to get a CC, just a more lenient POV based on the same principles as the program - Discipline! As Dave once mentioned to a similar caller on-air, this is more of a philosophical point than any other.

Bob February 25 2010 2:23 PM

I disagree, I use my credit card for monthly expeditures such as gas. I pay off my card at the end of every month on time. It's a free 30 day loan. I realize I'm the exception to your rule. But I keep my budget in my head and think about it any time a take out my credit card. To me my credit card is like cash. Plus if I need $35 for gas and I have $40, some how I find a way to spend that remaining $5. So when I use my card I only spend what I need.

Jeff February 25 2010 12:39 PM

I am interested in ordering a book online from Amazon. I can only do so with a credit card. What about a credit card that allows a limit of $100 only. Does that affect my credit rating?

Howard White February 24 2010 2:44 PM

Regarding "feeling the money leave you", when I buy something on-line using my debit card, and then post the amount I just purchased to my "envelope", I can assure you I feel the money leaving. It is not pleasant to see the balance in that particular envelope account drop. I can also feel it when the amount is posted to my checking account and I see the checking account balance drop.

Karen February 24 2010 1:04 PM

Using credit cards for the rewards are just not worth it. By the time you receive the reward, you have already paid for it 3-4 times in the interest you have accrued. http://www.cesidebtsolutions.org

ParisGirl111 February 24 2010 11:49 AM

I completely agree that more money is spent using credit cards rather than cash. I have personally experienced both situations and cash is definitely the way to go!

Jordan February 23 2010 11:47 AM

I could not agree more with Mr. Dave Ramsey. When I use my debit card it is so much easier to spend the money because I don't "feel" it leave me. When I use cash I cringe and feel horrible afterwards.

Krissi February 22 2010 10:15 AM

I am a sophnore college student and I am taking a Personal Finance class in which we follow Dave Ramsey and Mrs. Omanm. I have to agree with Ramsey's theorey On credit card debt the only way to avoid it is to not purchase a credit card period. That includes debit cards with over draft pertection. Over draft pertection allows one to abuse the point of a debit card. I did not know that a debit card that had over draft pertection on it was considered a credit card until our last class session. I have over draft pertection but for me it is not hard not to over draft just because everytime I swipe my card I know that my money is comming out of my account. I also belive that today it is rude to most people to hand them cash instead of credit cards. My bank told me that I had to get a credit card to start building my credit. Is this true?

Jessica Braden February 21 2010 11:45 PM

I am a sophmore in college and I am taking Personal Finance and my class follows Dave Ramsey. Dave has taught me alot of different things. I learned that my debit card is actually a credit card because it has an over draft pertection. I did not know that. Many people take full advantage over , over draft pertection but with myself I still see it as I am lossing my money everytime I swipe my card and that is why I do not use my card. I also believe that it is very hard to not use credit cards today because everyone is using them and Its rude now to use cash. I only got my credit card to American Eagle clothing store just because my bank told me that was the only way to build my credit.

Jessica February 21 2010 11:36 PM

I'm with Deana and Meg. I hate blanket statements like "Responsible use of a credit card does not exist." Of course it does. I keep my card limit under my monthly salary and use the credit card for everything. At the end of the month I pay off the credit card and flick the rest of my salary into savings. At the end of the year I have enough reward dollars (my bank gives me something like 1% of total purchases back) to cover the the credit card fee and maybe even buy something like a waffle maker (mmm waffles.) During the month I'm earning interest (in my savings account) on the money i would otherwise need to keep in a low interest debit account (or my pocket) to cover my monthly purchases. More benifits? I can shop online easily getting prices well below walk-in retail outlets. You waffle-less cash-carrying folk are asking for little more then a mugging imho...! Self control is all it takes...

Jesse February 20 2010 10:33 PM

Everyone who says that it is impossible to buy things without a credit rating is wrong. Its called paying cash. When you live below your means, you save money. When you save money, you can afford to purchase what you want, when you want. I suggest for anyone to read Dave's Total Money Makeover. Then attend Financial Peace University. FPU is a very empowering and motivational class that will really give you the drive to succeed with money.

Travis February 18 2010 1:43 PM

Citibank is imposing a new $60 annual fee on a lot of their credit cards. Even though I pay two Citi cards off every month, this is just the kick in the pants I needed to get me to drop my credit cards. I've held these cards for 10 & 14 years each - Citi has just helped me when should have just listened to Dave in the first place! See articles about the annual fee on FatWallet and Slickdeals.net

Bill February 14 2010 8:46 PM

I am a credit addict (I am addicted to debt). And I very much agree with this article! I also wanted to say that I have been helped a lot by Debtors Anonymous (a nonprofit network of 12 Step groups for people who are addicted to debt and financial chaos). By the way, they call their support groups "Meetings": http://www.debtorsanonymous.org/help/help.htm

John February 12 2010 12:09 AM

Penny, We have been on the makeover for 3 years. If you are living debt free you won't need a credit rating. Save and buy a car, furniture, trip or whatever. For most Americans credit cards are hard on your credit card score. Most people do not pay on time or pay the minimum payment. Stick with the plan. You will be glad you did it!

Tina February 11 2010 9:19 AM

I read your book: The Total Money Makeover. I am starting your snowball effect on my credit cards. My mom heard that is is bad on your credit score and credit report to close credit accounts. When the cards are paid off, do I just cut up the cards or call to have the account closed?

Penny Millirans February 08 2010 9:53 AM

we asked for a lower payoff of a credit card and were told that if we take a lower payoff amount they would list it on our credit report as an R9. even though we have never had a late payment. is there a way around this or should we just pay the balance owing.

Joleen January 31 2010 11:29 PM

I don't disagree with very much of this. Unfortunately, Mr. Ramsey neglects to mention how without a credit score - any kind of credit score at all - one is unable access some basic services and utilities. Natural gas is one example, as I learned the hard way one winter: After spending several frigid nights without heat, I was finally able to start gas service at my apartment by signing up under the name of a family member who had a credit rating. Furthermore, the statement "You will spend more if you use credit cards" is a notion easily disproved. Empirical evidence indicates that it is possible to use a credit card to pay for a single purchase one would need to make with or without said card - gas for one's vehicle, for example - and pay off the balance at the end of the month (or sooner). In a perfect world, of course, those of us who find foolhardy the practice of borrowing money instantaneously for any purchase, be they necessary ones or those made with frivolity, would be celebrated for our personal fiscal responsibility. As last year's bailout demonstrates, however, the world we live in is driven, and in large part controlled by, powerful organizations like banks - you know, the guys making money off the credit cards. It's like being a slave, sort of.

Adam January 31 2010 3:57 PM

We signed up for a Upromise Credit Card 8 years ago, charge EVERYTHING on it, pay it off in full EVERY month and have earned $1900 in which we were able to Cash out instead of choosing one of their 529 plans and invested it in a ROTH IRA. We watch what we spend because we know we have to pay in full when the bill comes in. Never paid interest on a credit card in 25 years! :)

Deana January 30 2010 9:48 PM

Well my question that I have: since the banks have gotten the bailout and from what I understand is that many of the banks aren't going to repay the bailouts, so shouldn't CC holders then not pay their cards back?

Andrew January 25 2010 11:20 PM

I was wondering what Dave thinks about Wal-marts pre-paid credit cards.

David Allain January 21 2010 1:39 PM

hey Mr DAVE ,been in business 11 years now and built up the buisness with credit cards , $200.000 in credit debt and all current , by the mercies of God,but the buisness slowed down a bit , and gettin harder to pay , i see all these company.s willin to help with credit card debt , so many out there is any of them for real ? i kinda look at it like some one went to dental school , they graduate and have 200K student loans , any reconmendations i can do instead of bank rupt,

dennis January 13 2010 4:42 PM

I have never owned a credit card but sadly enough I have a poor credit standing. I ran into trouble with several checking accounts which subsequently placed me into chex systems. I have worked diligently paying these debts off. Now the problem is 7 years of not being able to open a checking account. In addition it will stay on my credit. I would really like someone to tell me if a secured credit card with reasonable fees is a good way to begin to re-build credit as well as give me spending power because as I stated I won't be able to open a checking account for quite a few years? Please help if you can.

Brian January 12 2010 6:07 PM

I am 72 years old, retired and have been married to the same wife for 50 years and have no debt. We have had trouble with Master Credit card making their own mistakes and causing us to many phone discussions to straighten out the mess. Now my wife and I are having a discussion about the merits of a different cred card application, Visa, or going to use of our debit card instead. Is the debit card safer to use when there is a disputed charge or should we go back to another credit card?

Robert Davidson January 02 2010 10:04 AM

What about everybody taking all the credit cards and cash them and not paying ? How much time you think the companies will chase everybody after going broke ? If everybody will have the bad credit how CC companies will exist ?

Gordon Brown December 22 2009 6:56 AM

Chase Card Services charged me finance charges on a closed account and the APR was increased from 12.22 to 44.45%! I called them and they assured me that it would be removed in 24 hours. I got a personal loan from Pentagon Federal Credit Union for 8.99% and used that to pay off the Chase Card. Credit unions are the way to go.

Christine December 09 2009 1:00 PM

The other problem with Rewards Cards is that the retailer's fee for processing is often double or more of a regular credit card, which means that when you use the Rewards Card, you're basically either causing the retailer to raise prices for everybody else, or enriching yourself from the retailer's pocket. This is the unseen side of Rewards Cards that most people just aren't aware of; and the credit card processors don't hand on all the additional fee to you, of course - they are lining their pockets as well! Another sneaky practice is that the credit card processors raise their rates about once a year, and if the retailer doesn't ask for a rate review, the rates creep up over time - so the retailer is out even more money for letting you use a charge card! Debit cards have substantially lower fees.

Patrick December 07 2009 9:35 PM

Maureen, Citibank is now closing my account on 12/31/09 due to inactivity. I tend to use my Wells Fargo credit card and pay it off each month. My guess is they are purging the accounts with less activity to reduce their account balances over time.. not sure.. but I'm interested in the reason. Now, with all of the companies increasing rates, I'm starting to question if I want to use a credit card on a regular basis like I have been. I'm leaning towards using cash instead. Thanks for the article.

Kim December 05 2009 4:43 PM

I heard that credit card companies are closing accounts when they get to zero balance. Is this true? How much does that hurt your credit rating?

Maureen November 24 2009 6:35 PM

Dave, I'm a married 44 year old male with two kids and $0.00 debt. House, cars all paid for. We use debit cards, but have considered getting a credit card as I understand they have better protection as it relates to stolen identity. I have not had a credit card in 10 + years, but when I did, I never carried a balance. After reading a few of your articles...i think i'll just keep the debit card. Thanks for everything.

CT November 17 2009 4:49 PM

I do agree with about 90% of what your saying. people do ignore the obvious truth that when you get into carrying a loan around in your pocket your purchases are less thought out. It would be a great idea to stay away from credit cards 100%, but not all uses of a credit card are naive. If say you have an emergency credit card you rarely ever use, and never made frivolous purchases it would be a good thing and a minor safety net for week periods of your income. I understand you are saying almost no one can do that, and I believe you, but if someone could willfully use a credit card with responsibility it would not always be a bad thing, sometimes a good thing. I enjoyed reading your article. Thank You.

Erin Lamb November 15 2009 5:54 PM

"NO positive side to credit card use"? Come, now. Of course there is. I see three main positive sides to it: 1. It helps you build credit. 2. Using credit allows you to delay payment for up to a month. The means you can put the cash you would have otherwise used in a savings account during that month, where it can gain interest. Then pay off your credit card bill in full at the end of the month, and keep the interest for yourself. 2. Reward points are great, and they come in all forms - not just car rebates. It's effectively money you would not have had if you had paid in cash. Can credit cards be misused to great detriment? Is credit card debt bad? Absolutely! But it's specious to say there is no such thing as positive or responsible use.

Meg November 12 2009 4:51 PM

Is it better to cancel a credit card after paid off or just keep it with a zero balance?

Jessica November 08 2009 3:49 PM

Thanks Dave for all the good advice. I sent many articles to my children.

Ann November 01 2009 7:02 PM

I love getting coupons and promotions through the mail because of my credit card. For example I get a free pair of panties every month from victoria secret because I am a card holder. Sometimes that does influence me to buy more, but I always pay off the transaction at the same register at the same time that I used the card, so I feel like I'm paying cash anyway. I am very careful of my credit habits because of what I've seen my parents go through. I hope I'm not making some big mistakes!

Andrea September 30 2009 11:42 PM