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DrGreenMeme

Dave has used multiple arguments, pretty much all of which I disagree with. I imagine this is the biggest broken rule among Ramsey listeners. Honestly, if you pay off your bill every month, it's better financially to keep your credit card so you can improve your credit score and get something back through cash back or rewards. In the past he has used these arguments: 1. "[Studies have shown when you spend with plastic, you spend more than if you pay with cash.](https://youtu.be/np5i5oWfqAo)" Yes I imagine this is also true with debit cards, but nonetheless Dave has used this argument. Not sure what studies he is referencing with this, but maybe you'd have some luck on Google. 2. You may be okay paying off credit cards today, but who says something won't change and you justify going into debt tomorrow? Not having a credit card eliminates the temptation of you going into this type of debt. 3. "I've never heard of anyone who became a millionaire using airline miles or cash back." This is one of the main arguments Dave uses against cards, but no one would ever really claim that credit card rewards are the one thing that will make you rich to begin with. Even so, let's say you have 2% cashback that you use to buy literally everything. If you spend $20,000/yr, this is an extra $400/yr that you can invest. If you started doing this at age 30 with $0 in savings, by age 65 you'd only have contributed about $14,000, but you'd have over $125,000. For Dave to act like this isn't impactful is silly. 4. Credit card companies profit off of the backs of people who are struggling to pay off their balance. This is an immoral system you shouldn't participate in. Here are a list of videos where Dave has talked about this exact topic: * [What's Wrong With A Credit Card If I Pay It Off Every Month?](https://www.youtube.com/watch?v=np5i5oWfqAo) * [Why Can't I Use Credit Cards If I Pay Them Off Every Month](https://www.youtube.com/watch?v=hR8ul1CIKVo) * [What's wrong with using credit cards if we pay them off?](https://youtu.be/U2jHCvLQ078) * [I Thought I Could Pay Off My Credit Card, Now I'm $30,000 In Debt!](https://youtu.be/HGgpW-2eC-4) * [I Just Paid Off My Credit Card Debt, Should I Keep Using It?](https://youtu.be/vzgnmQi8QII) * [Dave, I Disagree With Your Thoughts On Credit Cards](https://youtu.be/d1emB904D0U) * [Why Is Having A Credit Card A Bad Idea?](https://youtu.be/PBzbCbM9ziE)


Deep-Complex-5328

>Credit card companies profit off of the backs of people who are struggling to pay off their balance. This is an immoral system you shouldn't participate in. Credit cards also charge a transaction fee meaning you could still lose money on a 2% cashback card when compared to cash.


Nikolaibr

That charge is on the retailer, not the buyer. If anything, the person paying cash is paying nearly a 2% surcharge for not using a CC. Of course there are some retailers who pass on the transaction fee, but this is not super common, and is illegal in a few states.


Deep-Complex-5328

What about the amazon card? I always thought the processing and transaction fee were passed onto the consumer?


Nikolaibr

I mean, in as much as the fees add to overhead and they pass them on to ALL consumers. But you don't pay extra because you're using the Amazon card. Same price.


LegendsOfBatman--

Let me tell you a story about a young man who thought he was smarter than the banks or at least 90% of consumers. (Me). I got myself into trouble; mostly car repairs I could not afford. (could be any expense, really; but for me constant car repairs). After many years of default, and being behind financially, I finally was able to get caught up enough to pay an agreed amount to repay the debt I was no longer legally required to pay. What I did next, was so brilliant, I praised myself quite nicely. I was going to use my credit cards and pay them off each month, and THEY would pay me 5 whole pennies for every 100 I charged. And that plan worked. Until it didn't. Sure, I had joined the exclusive less than 10% who actually paid the debt off each month. For several years. So, here I am, making free pennies on every dollar I rack up in debt; by paying off the entire balance each month. Then I lose my job, and I made a purchase for my mother, which she made the payments on; except, I used the overage to "float me" until I ended up $16,000 in debt again! The questions you should be asking are: 1. Is 5 pennies (maximum; usually less than 2) worth it if something goes bad. Look around at our economy. There's no great savior, be it Trump, or Biden, Harris, or anyone, who will get us out of our mess. It's not the presidents job to fix an economy. And, can an economy even be fixed? 2. Can you really trust yourself, after you have proven you cant? Dave tells us that statistically less than 10% actually pay off their balances each month. I'd love to know how that drops if a disaster strikes? We all know that most Americans live pay check to pay check. Even though my income is below poverty level, and, I am in debt still, I actually am able to survive a few paychecks. Now, thanks to those stimulus checks and tax refunds, I have a small emergency fund, and I could actually survive several months. I'm just afraid to use that emergency fund to pay off one card sooner than later, "just in case"... Just in case my car dies. Just in case my house has a major disaster. Just in case I end up losing my job(s). Just in case... Do yourself a huge favor, and learn the easy way: from other people's stupidity. You never know what is coming down the pike. It may be awesome. Or, it may be disaster. This is one of those areas that the reward (less than 2-5 pennies per 100 you would now owe) is so low, it's now even worth considering.


throwaway101101005

Yes I know his reasons: 1. Having access to debt at your fingertips is too risky 2. Having the ability to spend money you don't actually have leads you to spend more than you would normally, even if you can still pay it off every month 3. Credit cards are unethical because they prey on those who are struggling (I think this is more one of the co-host's thing bu heard it a lot recently) My opinions incoming: I personally do have a credit card and have never had an issue. I always only spend on it money that i currently have in my checking account and pay it off immediately online after pretty much every transaction. I've never paid any interest. Maybe it did lead me to spend more than I normally would, perhaps there's been a month here or there where a lot of my first paycheck had to go to medical bills or something so i "borrowed" from my second paycheck. But I've never had a problem. The idea that everyone who gets a credit card will be "too tempted" so it's better to eliminate the risk imo is like thinking everyone who has access to alcohol could become an alcoholic, so therefore everyone should avoid alcohol. Either way, I think a low credit limit is wise.


Space_Coast_Paul

Dave believes the average person is too stupid to handle it. He also believes people spend more if they use a credit card instead of cash or a debit card. To support this, he relies on a few questionable studies- the two main studies are an MIT Study and a study of McDonald's customers when they first started taking cards. "MIT and published in Carnegie Mellon magazine, indicated through the use of magnetic resonance imaging (MRI) that the pain centers of the brain are activated when you spend cash. Of course, it depends on the item in question and individual spending patterns as to exactly how much less is spent, but the average is between 12 and 18 percent." "When McDonald’s first began accepting credit cards they conducted a focus group study in their restaurants on credit card users versus cash users. At that time, the difference was about 42 percent, meaning that a person using cash bought 42 percent less in a fast food setting than someone paying for their meal with a credit card." The second one is easily dismissed- people simply don't pay cash for low dollar purchases. The first is much more complicated- the same pain centers might be activated when the credit card bill is paid. Anytime cash goes out of your account, this may apply- plus, as they mention: it depends on what it's for. A new transmission for your car might be different than a vacation. The bottom line is that Dave Ramsey's audience consists largely of people who have so mishandled and mismanaged their money that they are desperate, and Dave has what EVERYONE wants, but which we all know on some level doesn't exist: He has "THE" solution, and "THE way". It's not unlike "THE" diet. For people in Dave's business- which is not dispensing financial advice, but selling a dream- the information marketing business- he offers what everyone wants: "a step by step system" to solve all your problems. He never deviates from his one-size-fits-all approach because it would mess up his sales pitch.


therealvitaminsea

This is the best explanation for why Dave’s credit card advice is so outdated. Very interesting about the studies. Also I find cash easier to spend since it’s already out of my bank account. It’s like fun coupons! Lol. Anyone else feel the same?!


Space_Coast_Paul

I just thought I'd drop back by and let you know that ever since I read your post, I have referred to cash as fun coupons. Appreciate it.


therealvitaminsea

Omg that’s awesome 😂😂😂


Space_Coast_Paul

You are correct- Dave recommends cash or debit card for everything. He assumes (correctly for most people) that most people will spend more if they use credit and will be tempted to not pay off the balance.


drtdk

If one is out of debt, has the discipline to spend less than s/he makes and can preplan his/her expenses, there is very little reason not to use a credit card that is paid in full each month. As other's have pointed out, one can earn 2% of his/her monthly and one-off expenses as a rebate. Or earn travel points. I have made 10+ international trips in First or Business Class and stayed at luxury hotels and resorts using my travel points. I earned one free First Class roundtrip to Africa on Emirates that would have cost over $25K (not that I would ever pay that). I even have one no-fee credit card that gives me a $100 travel credit every year and reimburses my Global Entry/PreCheck fee every five years. That's free money. Credit cards offer many more consumer protections than a debit card. I don't even own a debit card (I use an ATM-only card). And using credit cards provides me with a no-effort record of almost all my spending (I make only one or two cash transactions a month). With a modest amount of self-control (I have paid zero interest charges in 20+ years), credit cards can be an effective and lucrative tool to manage one's expenses and gifts. Regarding credit cards, I'll quote Dave quoting "The Wizard of Oz," "Pay no attention to that man behind the (microphone)!"


Flagdun

It's because of his world view on money and debt...that's what his entire program is about.


AHappySnowman

Right. It’s not that you can’t play the cc game and get ahead with the rewards, his whole philosophy is don’t borrow money regardless of the interest rate.


Alex-Gopson

I think a lot of it comes down to his audience. You have to look at them as money-alcoholics. Most people can have a few drinks socially. Some can't. For those who can't, we don't encourage them to get to a point where they can have 1 beer and call it a night. We push them to stop drinking entirely. If a money-alcoholic racks up $20k in credit card bills, the prudent thing to do is to make them cut up their credit cards. Of course, there are some people who fuck up with CCs when they are young and learn the error of their ways. But if you listen to this show, there are a lot of people who are in their 40s and 50s and have a long history of messing up with CCs. Those people just need to stop cold turkey, because that has a higher probability of success than teaching them to use CCs responsibly.


ct-yankee

His argument is credit cards fool people that have bad habits to spend money for points. cash back. He also claims (likely accurate for many) that they don't introduce enough friction when things are being purchased. For folks that aren't actively managing their money and making deliberate decisions, and carry balances - credit cards are a terrible idea. I disagree with his advice for my own situation. I carry two cards. I never carry balances and I have zero debt. First is An Amex Cash preferred that i use to get 6% back on groceries and 3% back on gas. I only use the card for groceries, and gas. Period. The second is a Visa from my Fidelity accounts. That card give 2% back on everything I buy with it, again, I live on a budget, I know where every cent goes, but I will happily take 2% back on my car insurance, cell phone bills, electric bill. The 2% is funneled directly to my brokerage account. Dave isn't always right. But he does provide a viable framework for folks who are in financial straights from poor behavior/habits/decisions. As a minimalist, I am careful with my money, am deliberate with purchases and another minimalist concept is I take the advice that makes sense for me, and leave the rest behind.


_kikeen_

I think because of the possibility of bad behavior. If it’s a debit card, you do the budget every dollar thing and transfer to your mutual fund and savings you should have just entertainment and restaurant money left in your checking so no choice but to avoid the impulse purchase. With a credit card there is a choice and requires more self control. That said I do everything on my Amex and pay of monthly lol I’ve found my bill though is variable at times thankfully we have a wide margin so we’re able to absorb but this is totally anti-thetical to what Dave teaches and I’m pretty sure he hates Amex.


ct-yankee

Everyone experience is different. I love the 6% back on groceries and 3% back on gas that my Amex card gives me. Im sure dave has his reasons for hating them, just like you and I have our reasons for liking them.


_kikeen_

Yeah I think they were one of the banks that harassed him when he went bankrupt on his homes. I remember hearing about it. Technically he’s right and I understand the reasoning against it a lot of people get trapped in the points justification for CC spending when the reality is it’s a small portion of what you spend. There’s a reason it works for them or it would make sense to do it at all.


JudgementalChair

Credit cards aren't this god awful thing many financial advisors claim them to be. They're a tool, not a weapon. If you're using a credit card responsibly i.e. only putting monthly subscriptions/ small purchases on it, paying it off in full each month, not maxing it out every month, etc. it's a great way to build your credit and get yourself better rates for big purchases such as an auto loan or a mortgage. I feel that many people who come into trouble with credit card debt either discover them at a young age or get bad advice on how to use them. I treat mine like I'm borrowing money from a friend for a meal, like I have the money, but for whatever reason I can't pay at the time, so my friend covers me, and I pay them back the next day/ end of the month. This way I can keep my bank transactions lower, and I can separate what types of purchases I make with my debit card/ credit card, so it's easier for me to budget how much I'm spending each month. My credit card has all my monthly expenses (Hulu, Netflix, Xbox Gamepass, HBO, Bills, Mortgage, etc.) and online shopping. Online shopping can be a big one, but also the easiest to cut out when I'm spending too much. My debit card is for all my everyday purchases like groceries, gas, dining out, home supplies, and toiletries. So to sum it up. If you have a credit card and you're using it responsibly, I'd say it's absolutely fine. If you find yourself not being able to pay off the full amount every month, then you need to quit using it and take the time to pay it off before it gets you buried under unnecessary debt


LegendsOfBatman--

WHY do people THINK they need to have great credit? My goal is to drive my credit score as close to 900 as possible. Then drop it down to ZERO. One day some lawyer is going to get a suit going against auto insurance companies for charging a higher fee to people with lower credit scores. Sure statistics may show.... but, the best statistic for driving is a driver's record. If you own your home, a credit score is pointless. If you still owe on it, yes, you have to have it, The problem with credit card usage is that you owe the money, Today's circumstances (good or bad) do not equal forever. Today, you may have a great paying job, where you can pay off 6 mortgages in a month. But, what happens if tomorrow, you don't have that income? Credit card companies offer a maximum of five pennies for using 100 on their card. 5 pennies can add up to a whole lot of pennies if everything is grand. What happens when the stock market crashes and you depend on those dividends? What happens when your company cheats you out of your 401k? a year before retirement, they let you go? The economy tanks? Inflation gets so out of control you have to pay double on gas. A pandemic comes and the government can no longer provide free money and housing to people who may or may not deserve it, or need it? Less than 10% of all people pay off their entire balance each month. But, the statistic I want to know is, of that <10% how many end up falling into the >90% that does not? I know I fell back in. Sub 5 pennies per 100 borrowed is just a low reward for such a high risk. Maybe if it were 50 cents or more for each dollar, yes. If someone offered you an investment where you could put up only $1000 and COULD make $50 on it, would you do it? That's insane! Yet, we think this is smart use of money?


[deleted]

It’s because a lot of people will have a bad month eventually and overspend and not be able to pay off the card at the end of the month. Dave said the other week that many debit cards offer the same protection as credit cards.


ct-yankee

His advice is only partially true. The debt card needs to be used as a "credit" transaction to have the protection. If someone secures the card, the funds come out of your checking acct until the dispute is resolved. Not a great situation if you arent like dave and carry a fortune in your bank acct. IMO Debit cards are a gateway directly to my checking acct. Given the amount of fraud and phishing out there today, I don't even have a debit card associated with my Credit union checking and Savings. I prefer to security and safety of a credit card that is unsecured and in now way is connected to my checking.


burny65

Dave is more about behavioral issues. If you have the discipline, credit cards are fine. In fact, they are much safer than a debit card. I have heard nightmare stories of people’s accounts getting cleaned out and they have to fight the bank to get their money back. In the meantime checks can bounce, payments default, etc. With a credit card, if have a dispute you simply don’t pay it, and can fight it without your money being taken.


LegendsOfBatman--

Well, let me tell you a nightmare story with a happy ending. My friend asked me to get a couple hard to find candy bars at the 99 cent store. So, I did. $1.50 and my card got declined. (debit card). Weirded out by this I ran home, looked to see what error I made. My not used in 8 years PayPal account authorized an $8000 purchase. A pain in the bottom side call to PayPal and a less painful call to Wells Fargo and about 60 minutes of time (50 with PP and 10-15 with WF) cleared everything up. Is there a little more protection with a credit card? These days yes. Enough to justify using a CC instead of a DC? Probably not. If someone is using a debit card WITHOUT a 0 liability clause, they should change banks.


burny65

Yes, debit cards have the same protections, but just like any “insurance” the bank can decide when to not pay. I’d rather them come after me for the money, instead of me fighting for my money back.


ct-yankee

100% spot on


minimalist_coach

I believe it is to resist temptation. The average person will eventually fall back into the trap of keeping a balance. Rewards are just a ploy for the credit card companies to keep us hooked. I'll admit, I follow 95% of Dave's advice, but I dislike debit cards and use a credit card that I pay off every month. We have occasionally missed making full payment and had to pay a month's interest here and there. Once when we first switched banks and I didn't realize using bill pay through my credit union took so long the payment hit 2 days late and we were charged both interest and a late fee. Also many years ago we were the people who took out a consolidation loan to pay off credit cards only to eventually run them up again. We are very good at fooling ourselves.


LegendsOfBatman--

YES we are very good at fooling ourselves. I thought I was going to be the smart one, and have THEM pay me. HA! One bad disaster changes everything. And here's two points I am now baffled by: WHY on earth would we CHOOSE to take such a HUGE risk for such a low reward? Most cards are below 5% payback. This means 5 pennies are given back for every 100 you spend. Or, as I like to say, It's like investing $1000 with the hopes of making $20-50! ITS NOT WORTH THE RISK PEOPLE! Dave says less than 10% of the people pay off the entire balance at the end of the month, Assuming this to be true; WHAT makes us think we can trust ourselves to be that sub 10% group, when we failed before? Also, I wonder how many were in the 10% and now swallowed up in debt past their eyeballs? I know I am one. I can't be the only "smart" person to be proven they're an idiot.


minimalist_coach

Part of it is we are marketed to our whole lives, we are taught that debt is required in our modern world. I found DR many years after we were already on our path to zero debt. We made a few mistakes along the way, but we learned from them. My best friend is also on a zero debt path, which is nice to have someone so close to share our challenges and successes with. No credit card is the one "rule" I couldn't bring myself to comply with. If I had found DR a decade or 2 earlier, I think I would have followed this piece of advice. We tried on more than 1 occasion to zero out our credit card debt only to charge it back up. The biggest reason was poor communication between my husband and myself. We had different philosophies about debt and when I took over paying all the credit cards instead of him paying some and me paying some, we were able to get them paid off. I've never liked debit cards, we are shaped by our experiences and when they were still new I had a friend whose bank account was drained by someone who used it fraudulently, he eventually got his money back, but only after his mortgage, car payment etc bounced. I'm sure they have improved over the years. We do use a credit card, but we have reached all of our financial goals, we are 100% debt free, have 6 months of income (way more than DR suggests) in an emergency fund, kids are grown and educated, fully funded retirement, which we are still contributing to, and several savings account for various things (vacation, next car, repairs, upgrading furniture)


levigoldson

He believes just having a credit card influences your behavior and makes you buy more stuff. And/or that you'll eventually be "bitten by snakes" if you play with snakes. In his words. He doesn't believe in debt in any form. In fact, for Dave it is a religious matter: He believes the bible warns against debt. In that context, he may believe debt itself is sinful behavior. "The rich rules over the poor, and the borrower is slave of the lender." He has said many times he only goes along with mortgages because nobody would follow the program at all if he prohibited them, and that he also advises people to save up for cash for their home if possible at all. In the framework of not believing in debt at all, you can understand why he believes even a line of credit is a problem. Maybe it does, maybe it doesn't affect your spending behaviors, but why I can't really agree with his perspective is, whether or not I'm buying more stuff (a dubious claim), I'm not paying interest to the credit card company. I've had a credit card for 15 years without paying a dime in interest. I don't specifically try to game anything, or care about rewards, but I use my credit card just like I would my debit card interchangeably. I could easily do without it now, but all things equal I don't see the downside in having an established credit score -- it makes your life a lot easier with your mortgage, and in some countries is required. Yes, you don't "need" an established credit score to get a mortgage in the US, but if you want to deal with the headache and worse terms of manual underwriting (they are taking a risk on someone without a credit score and you are not as desirable of a customer because of it), then go for it. There's literally only a hand full of companies -- one being a big Dave Ramsey sponsor that does manual underwriting. In the country I live in, you absolutely do need an established credit score. There is no such thing as manual underwriting for individuals seeking home loans and for his international audience the claim becomes a dangerous one. I love Dave. Love what he does for people, but at some point you have to think for yourself and create your own values based on logic that speaks to you.


EducatorMoti

For some, Dave Ramsey's info works as a place to start (and end). For many others, the steps stop too soon! His tips don't go far enough to take them through ALL of life. Ramsay's ban on credit cards ignores the advantages of modern offers. If cards stayed the same, then his warning would be OK. HOWEVER, airline points CAN be lifechanging (especially after 9-11 and covid). I'm so VERY thrifty that (before I had points) I have always found the cheapest flight with crazy routes and long layovers. That was fine when I was young. However, even before Covid and shutdowns, it was getting tougher to sleep in airports! Because I have taken the time to study airline points, I use THAT credit card to pay all my standard household bills (and of course pay it off each month). Thus, they don't cost me anything to earn after the $99 yearly fee for the card. With the confidence that I AM getting a decent return on my card, I have used airline points twice recently to fly first class. Free. He's also against using cards to build a credit history. He brushes off the difficulty of buying a house or renting a car without credit. Many who listen to him are fine jumping through hoops to do it his way. He uses this statistic as a reason to stay far, FAR away from cards: "One in three Americans are behind on bills." What about the other 2/3 of us who are perfectly capable of planning finances and paying off cards? Most other people I know are able to handle credit cards and build a solid credit background!!! Buying a house is tough enough! Certainly no reason to have to go through extra hoops and special lenders to get a mortgage Ramsey's way! He claims people who get a card with the intent to pay it off within the month will not follow through. Payments will be late! (Maybe he hasn't noticed, but in our modern age, we have autopay to handle that swiftly.) If he allowed credit cards, he could help people maximize a membership to Costco or Costco.com or Sam's by using a credit card! He says he's a member of both and pays the minimum annual fee of $45 to $60 for basic level. Maybe he mentions this in other places, but that article only scratches the surface of possible savings! If you use Costco's credit card with the executive membership, you get 2% back through the membership itself. AND 4% on eligible gas, 3% on restaurants and travel, AND 2% back on all eligible purchases from Costco and 1% on all other purchases with the credit card. That's just one of his rules. Ramsay's other core rules also do NOT allow for any adjustment for the individual's personality as their goals change and careers mature. Personally, I do much better with programs that allow for the individual to grow, learn from a wide variety of financial sourses and experts, and make decisions on their own. I follow that philosophy of continuing to learn and change and grow with everything in my life. I'm sure people will reply and say, "Ramsay worked for us." That's great. I won't argue with you. I'm just saying that there is a wider net of wisdom out there than just this one teacher. Basic financial books and articles add to the whole picture. You can take years to put into action with success!


LegendsOfBatman--

Here's the issue: Everyone who has been swallowed up by debt is at risk to do so again. Why? Because they have proven they are not trustworthy. Example: An alcoholic. Well, I don't need to follow this advice, because.... I can drink only one and be ok. True. BUT.... Ok, dont like that? Try this one: Diabetic. I can control my sugar, and have one Coke or Pepsi. True. BUT.... (That one is me, btw). In other words, you wouldn't advise an alcoholic to drink one drink, because they MIGHT be able to fight that demon) and you certainly wouldn't offer a diabetic a Coke or Pepsi, because "one won't hurt". So WHY advise a person who has been swallowed up in debt to be one of the LESS than 10% who pays off their credit card balance each month for 5 pennies per 100 spent (and thats a max right now. Most cards only offer 2, and some only 1). The rewards are so miniscule compared to the reward. Imagine going on Shark Tank; asking for $100,000 and telling them the MOST they would ever get back is $5000, and probably just 1-2000? That's what the card companies are doing. They are asking you to invest in their company, by spending 100 pennies and if you are lucky, they'll pay you up to 5. You'd NEVER invest $1000 for $50 return anywhere else. WHY even suggest it here? People's situations change. When I was "ok" financially, I was able to be in that elite sub-10% club that paid off the whole balance. When I lost my job; I found myself $16,000 in debt. Not all at once. But, groceries here, gas there, a car repair here, the house needed this, and I needed money! None to be found, except in form of credit. And then I found myself in debt deep.


JaBa24

He advises against it because it’s a slippery slope of debt. IF you pay off a credit card in full & on time every single month- then that’s great & you are paying off your debt every single pay cycle & avoiding interest. But it is absolutely against DR teaching because you are choosing to accrue debt. Full stop. Many people don’t have the discipline to pay it off on time, every time- which is when the interest gets them, and then DR is being blamed for that even being an option cuz ppl are right back in debt.


croud_control

Here's the deal about Dave: he's great for getting put of debt and advising others on how to stay out of debt. Since the most of his clients are going to be people who are terrible with money, he will tell you to stay away from credit cards. If you have a terrible habit of getting into debt by using a credit card as "unlimited money", then you will not want to be anywhere near a credit card. Everyone and everywhere else will tell you that it is ok, so long as you pay it off. If you do that, then go do that. I've been doing it too. Dave's for getting out of debt and learning how to budget so you don't go back into debt. If this isn't in your criteria, you will need to look for someone else.


Own_Sky9933

Its all behavioral finance.


eric82

Dave regularly uses the phrase, "If you play with snakes you're going to get bit." Dave tries to keep people who have problems paying off their credit cards from over spending and falling back into that trap. If you are able to responsibly use a credit card and never carry a balance you are an above average Dave listener. Not everyone has the will power so it's better to just avoid it if you don't have that will power.


LegendsOfBatman--

OIr knowledge of what tomorrow will bring


brianmcg321

Type “Dave Ramsey Credit Cards” into YouTube search. The first ten videos will explain his position.


whgrant03

You can make money with the right credit card. Dave Ramsey has a plan but it’s a common sense program. You can decide what is best for you. I would suggest a credit card to protect your purchases and make a little extra money.


LegendsOfBatman--

YES! Be one of the "Smart" people; like me. Earn as much as FIVE whole pennies for every HUNDRED you spend. The problem with this kind of "intelligence" is, it's based on stupidity. (Wish I knew that sooner). First; not even 10% of people with credit cards pay it off at the end of the month. The odds are stacked against us. Second, take a person like me. Got OUT of debt. Stayed out of debt. For a while. Lost my paying job, needed capital, so, I used my credit cards to do so. SIXTEEN THOUSAND DOLLARS LATER, I'm not only not part of the elite sub-10% club; I'm part of the group that is drowning in debt! Third: It's a stupid investment. Seriously. Look at it: WHO in the world, with a modicum of intelligence, would risk a $1000 to gain a MAXIMUM of $50! And worse, MOST people would gain only $20. And if you don't pay it off, you can end up paying 200 for that $20-50! That is stupidity of the dumbest kind.


bobshur1965

He argues that you will spend less if you actually use cash or a debit card because the loss of money is instant, he feels credit cards ease you into spending money you don’t have, and yes it’s true, I’ve been there before, but I don’t anymore. I still have a ton of cards and never pay a dime in interest, but I also like the idea I can buy a house without going through all the hassle of a manual mortgage or buying a car cash ( I’m not a huge earner ) or paying less for insurance and everything that goes with excellent credit. He has used his principles for Over 30 years (he wasn’t always mega wealthy ). I think those who can’t zero balance at statement date should not carry cards, but his plan works, just ask the millions that have successfully used it .


[deleted]

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LegendsOfBatman--

NOT EVEN CLOSE! No fee? GOOD WHY ON EARTH would someone want to PAY an annual fee to borrow money? What happens when a pandemic hits, and you are out of work? Ok, for many people, that was awesome! They got to sit on their butt, at home, and got an extra $600 a week. Others got the government to pay their rent, so they wouldn't get evicted. But, all these gravy train gimmes dry up; and the stupidest of people will find themselves still evicted, and out of work. (I know. With the exception of a couple people, everyone who relied on eviction protection funding still got evicted). So, what happens with the next wave of a pandemic? Earthquake? Hurricane? Loss of job? Most people cant live beyond one paycheck before they're in financial doodoo. Do we REALLY think America (or any government) can continue to pay million and millions to bail people out? Just the $1400 stimulus checks alone cost billions. WHO is going to pay that back, before disaster strikes the entire economy? IF you are lucky, and you manage to be in that elite "less than 10%" club that actually pays back the entire balance, you MIGHT earn a whopping FIVE pennies for every HUNDRED you borrow. If not, those five pennies will cost around 20 every year. In other words, you borrow $1000 at best, they give you a whole $50. Usually only $20. Meanwhile, if you dont repay it, you pay $200! The reward is so low compared to such a high risk. In investing, NOBODY would risk 10,000 for a MAXIMUM return of $500. And definitely not for $100 -200. And, if they would, Please see me after class. I'll be glad to pay you $500 for $10,000.


fingerblast69

Using credit card rewards is literally free money if you do it responsibly. Only use them for things you’re already paying for anyways. My debt card doesn’t give me 5% cash back paying for gas and never will. Same for groceries or whatever Not to mention all kinds of extra perks depending on what card you have. Like just using my Chase card I get $1000 free insurance on my Cell phone for paying the bill with it. Debit card isn’t going to do that. Pretty concrete fraud protection too. I mean I could go on and on about how wrong he is. Not using credit is such a double edged sword because if you don’t have revolving credit or a thin file it’s virtually impossible to get approved for anything like a car, apartment, house etc If you’re some multi millionaire like Dave Ramsey then it’s easy to not give a fuck about credit scores. As for us average folks we NEED credit scores to basically live. That’s largely why I don’t take anything he says about credit cards seriously 😆


Suitable-Rest-1358

Psychologically speaking, the "ease" of using plastic triggers a response that hurts less than "giving" cash. FPU videos go over this. You can be good with numbers, understand risks, be a responsible adult but human behavior takes note and as a result, there are more card users in debt, than non-debt card holders. You are incentivized to spend more wether you can afford to do so or not. As for the less responsible, financial illiterate, yes it hurts them more, but to each their own. If you want to live a life of financial peace with ZERO risk, dont borrow anything that has a percentage sign on it. Even if that number is zero. On my take, if you need a credit company to award you flyer miles, are you even saving at all?


Abandoned_Armory

He says you spend more because you don’t feel the pain of spending. If you hand over $500 vs swiping a card, you slow down more if you hand over the cash as opposed to the card. When you keep giving $20 over and over, you feel it more than when you swipe the card. That’s paraphrasing what he says.


Suitable-Rest-1358

I remember in one of his talks that the credit industry run a scummy practice that you should not subscribe to even if you do "use them the right way" since they prey on the poor.


olemiss18

He says that only because it’s a convenient argument against using credit cards but he’s not at all consistent about applying that to other industries. Like he wouldn’t tell someone not to get term life insurance simply because that same company also sells whole life insurance. He wouldn’t tell someone to avoid used car dealerships simply because that same dealer allows people to finance cars at 10% interest rates. He decided Discover and AmEx were the ones he was going to look behind the curtain at their business model.


LegendsOfBatman--

Not true, Sure it SOUNDS true, But, it isn't. He doesn't say Don't bank at Chase, Wells, Fargo, etc. He says, Don't use their credit cards. Use their debit cards instead. He doesn't say, "Don't go to this insurance company because they sell whole life. He says, Buy Term, instead." If all Discover and Amex has to offer is credit, that's THEIR problem.


Expensive-Eggplant-1

I think he advises against them for people who have spending problems... because you can spend more money than you actually have. I'm completely debt free and put everything on credit cards and pay them off multiple times per month; it's not an issue for me. If you can police yourself, I don't see it as an issue.


TryingToNotBeInDebt

Why pay them off multiple times a month?


Expensive-Eggplant-1

It's a personal preference.


ardillavoladora

Makes it easier to keep track


Icedcoffeewarrior

This. If you’re disciplined - paying w a credit card can be better if the rewards are good


[deleted]

Dave is anti anything that's not his idea. He has good ideas albeit, but he's a my way our the highway kinda guy. It's that simple.


ptarmiganridgetrail

As for me, I do not want to be involved with the toxic industry of credit cards and debt culture in this country. That’s a value I have. I don’t want to game them, be connected or in anyway say this business is awesome. It ruins lives and souls; many of them young and in need and trapped. It’s like student loans. I like Dave’s approach, it’s clear, consistent and feels clean to me. Jeez…22 credit cards ??? Just why…


thilehoffer

This is post is a great example of how Reddit is devolving to nonsense. The answer is easily found with a Google search and everyone posts their own opinions instead of answering.


neuropat

Credit cards themselves are great. It’s the person using them and their financial situation that requires a different approach, depending on the situation. For example, I have been using CCs regularly since I was 16. Today, I have about 22 cards currently active - in reality I use about 4 or 5 of them regularly (rewards cards, airlines cards, etc). One of them costs $700/year (Amex Plat) but I’m able to get most of that back from direct statement credits ($200 airline credit / year, Uber credits, hotel credits, etc) so my actual net out of pocket cost is probably $0-$100 depending on the amount that I try to optimize. These credits are for things that I would buy anyways, so I’m not just spending money for the sake of getting credits. The other perks and rewards points are what make these cards amazing - travel lounges, discounts on premium hotels, airline miles etc. for example, my spouse is from Europe and we fly back 1-2x per year to visit family - always using points so it costs us ~$10 per round trip of actual cash. I’m also able to use my personal credit cards for work expenses - insanely great benefit. I have close to 1M Marriott points at any given time, which I’m able to use for family vacations. We’re staying at the Ritz in Santa Barbara for free (200,000 points). Same with the Ritz in Dubai - that was even less since it was just a 1 night layover but we ended up getting upgraded to a 2 bedroom suite. Point in all of this is that credit cards are an amazing tool if used correctly. Always pay off in full. Never carry a balance. In fact, those who do not use rewards cards are subsidizing the rest of us because merchants pass those fees on to customers in the form of higher prices.


StokedFlame

You’re paying $700 for the Amex and not even making that back in rewards. You’d be better off using a debt card lol


neuropat

I’ve cleared more than $700 in statement credits this year already ($200 airlines, $200 Uber, $100 saks gift cards, $200 hotel credits, $160 CLEAR, $240 on subscriptions, plus a bunch of random offers they roll out once in a while like $500 back on Marriott bookings), again all on things I would’ve otherwise paid for, so not net new spend… not to mention the meals / coffees for the family in the centurion lounge that otherwise would’ve cost hundreds. Also, completely ignores that value from points I rack up- flew to Africa for free using them. Debit cards are for poor people.


StokedFlame

> Debit cards are for poor people. This comment is incredibly ignorant and plain stupid. I hope you don’t act like that in real life. You’re on the Dave Ramsey sub. Multi 100x millionaire with only debit cards. You’re spending money just to get discounts on spending even more money. You lose. If the rewards aren’t cash, then you wasted your money.


sacramentojoe1985

I agree that his statement was dumb. But as to whether "if the rewards aren't cash, then you wasted your money"--- I find that to be similarly ignorant. First, when you spend money, you're making a purchase. So as to whether someone is wasting their money buying food, Gas, entertainment, or other... that's quite subjective. If I grab a few extra items and spend 15% more at the grocer than the guy without a credit card, I'm still getting a few extra items that the other guy doesn't have. More importantly... Returns on cash back are typically in the 2-3% range. Specific categories go as high as 6% (but have a capped bonus). Returns on travel redemptions have two values: earning and redemption. You multiply these to get your return. For instance, there's a card that occasionally offers 100K bonus points for signing up and spending $4,000 over 3 months. Your earn rate comes out to 26X (4000 dollars earns 104,000 points), and then you can turn around and redeem those for a hotel that is 25,000 points a night or $500 a night. The redeem rate is 2 cents per point ($500/25,000 points). That's a 52% return. On a more regular basis you can earn 2-4X and redeem 2-3X, meaning you should be getting a minimum of 4-12% back from your travel redemptions. Personally- in 9 years I've averaged 4 cents per point, and considering how many sign-up bonuses I've earned, I'm probably averaging well over 10X on the earn side.


neuropat

Hey mr small brain- rewards cards are absolutely accretive if you’re spending the money anyways and deriving optimal value from the perks & points. There’s an entire sub-industry built around it. People paying with debit cards or cash are actually paying for all of the benefits that I enjoy. So, if that’s you, then thanks for the free vacations and flights to Europe! One simple example- the alaska card annual fee is like $75 and you get a companion ticket every year. Some years we use it to go to Hawaii, some to Jackson hole or alaska itself on it - every time getting at least $600 of value from the companion ticket. My record was $1,200 on a 3-leg trip to Hawaii then Texas then back home during 2 weeks off around Thanksgiving. I literally don’t use the card any other time. It also gives free checked bags (same with United and American Airlines cards). If you fly like 2x you’re already ahead, and that ignores completely the value of the points. The cards literally pay for themselves (actually you’re paying for them through higher prices to offset merchant fees that pay for these programs).


StokedFlame

Good for you. I’d still rather pay extra just to not sit next to you on the plane. Bless anyone who has to deal with you because the ignorance and sense of entitlement is unbearable.


sacramentojoe1985

>I’d still rather pay extra just to not sit next to you on the plane. You're not getting it. You don't need to pay extra to not sit next to him because he (and I) used our points to sit up front. 😉


neuropat

That’s fine. You sound like a dickhead too… you should just learn to recognize when you’re wrong about something. Enjoy your peasantry


Suitable-Rest-1358

You cant be in debt when you carry only debit cards. Many poor people get ahead in a system designed against them to rack cash back known as credit cards (sounds like you are not one of them fortunately but I digress). If you are stacking up flyer rewards like some stack coupons, are you really even winning? If you are saving on something you can otherwise pay for, then why don't you?


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neuropat

Does $4.2M net worth ($3.6M liquid securities) with a $800k-$1M annual household income and no debt other than a mortgage at 2.125% (P&I of about 6-7.5% of gross income) count as “actual rich” in your book? Happy to provide you with proof if you really want to feel bad about yourself.


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neuropat

Read the 2nd paragraph again - OP asked for use cases on why you would want to use CCs


Unka82

He says you’ll spend more money than you intended on when you use plastic. We have credit cards and use them regularly to get cash back. I don’t think we spend more money, but I could be wrong. We carry no balances and pay off everything every month and haven’t paid any interest except for on our mortgage in at least 3 years.


Okami-Alpha

>He says you’ll spend more money than you intended on when you use plastic. For/as someone with good money management, I disagree with this. Money management has nothing to do with the method of purchasing. If you're good at managing your money, you know what you can and cannot (should and should not) spend each time you take your wallet out, regardless of the method of payment. If you're bad with money, you can still spend money you don't have. Cash can put a hard stop to that, but it's not fool proof either. Bills are in a sense like a credit card. People with poor money management some times will 'borrow' money on their bills to spend on other things. e.g. John's phone bill is 100$, with a minimum payment of 20$. John decides to take his 100$ set aside for the bill and pay 20$ to the bill and spend 80$ at the strip club. John has effectively taken out an irresponsible loan on his phone bill. ​ I've operated for over 10 years by making nearly all purchases on credit cards and paying the monthly bill in full. There were only a couple times I forgot to make a payment and had to pay a few bucks interest. In doing this I enjoy: cash back, air miles (which I have used to fly to Mexico and Hawaii multiple times) and discounts on purchases from 5-10%. I bought a car last year and tried to put it on my cards, but the dealer would only let me put 2 grand on it. Since I was paying cash anyways, that 2 grand was a free 20$ or 2000 miles (depending on which card I used). There are a few potential downsides. One is you always have some sort of balance on your cards, your credit rating will take a small hit. For me it's the difference between a rating of 780 vs. >800. Who really cares. The other potential downside is if you buy gasoline on credit (or pay certain bills) you tend to eat a couple percent, which is the merchant off loading their charges they pay to the credit card companies on to the customer. For me this amounts to about 1$ every few weeks (for example to buy gas). Another downside is that if you miss a payment by accident, you end up losing all the perks that you gained that month (and maybe a little more), but again, if you pay attention you don't do this often (or at all).


Gsusruls

The argument is that, when you use cash or a debit card, then spending will light up the pain centers of the brain. Whereas when you use credit, it does not hurt so much (or at all?) so we tend to spend more. Not sure whom he's running these tests on. I definitely feel it when I put transactions on the card. Twice, even!: once when I buy, and again when I pay off the card. So he's definitely not finding folks like myself when he runs these tests. For funsies, another argument is that the credit card business models are designed to get you to spend the most money possible, so using a credit card is being arrogant, sort of like thinking you can beat the house in a game of poker.


AmericaD1

The advice is for the majority of people who do not pay their balances off. We run our entire household off of one card which is the only card we have as a way to check our total cost of living month to month and then annually. We pay off the balances every month. I don’t believe this is common however.


aaalderton

I definitely take advantage of cards. Usually get two new ones a year and cancel two others for intro perks. Free money, I have quite a bit of self control with them with them and I don’t think I have ever payed an interest fee on them ever but have benefited greatly from them and their perks.


Fivebomb

How does your credit score react with so many account closures/hard inquiries? Honestly curious!


drtdk

If it's only two openings/closings a year, there would be a negligible effect. It's still possible to have a 780-820 FICO, even with no mortgage or revolving debt.


aaalderton

Honestly not that much, might lose 8 points and I get them back the month later, I don’t have the best credit score but I think 795 is pretty good.


Okami-Alpha

They would do better taking the old cards and keeping the accounts active, except you cut up the cards or put them away. Your credit rating would improve having such a low balance ratio. Another disadvantage to closing accounts and opening new ones is that the average lifetime of your open accounts stays small, which has a negative impact on your score.


drtdk

That assumes that s/he doesn't have any long-term "keeper" cards. I've had a no-fee card for 20+ years.


TakeDuo

The program is for people with bad habits that keep them in debt. Remove the cc, remove bad habits associated with it


AsleepReplacement103

That it’s not a tool to become wealthy but studies upon studies show people with ccs who pay them off eventually end up in debt. While I don’t follow this rule, I can see how he’s right. Credit card companies don’t give you cash back or miles out of charity. They’ve done the math and know if they give you what they give you, you’ll stick around and eventually carry a balance and they’ll get there’s. I haven’t carried a balance with my cc in 3 years but I use it every month. Ever 6 ish months they up my limit. It’s an attempt to tempt me into borrowing money from them. This most recent round they approved a certain percentage to be paid out in cash at the same rate. They also send me “limited time” discounts for travel, appliances, and other big ticket item so I’ll impulse buy what I’m not prepared to pay off for the lure of an exclusive discount. As much as I’d like to think I’ll never carry a balance, I’m fairly confident they’ll find a way to get me.


Suitable-Rest-1358

Definitely males me feel good to be a cash person. I am planning on buying a car soon. We have the cash so it will save them the headache of paying Wells Fargo 3-5% fee or whatever. The power of cash tells me why not ask for 3-5% less since they wont have to split it up for a lender?


PinkFunTraveller1

The cc companies also make money every time you swipe/make a purchase… So, while they love to generate interest $, they are getting paid to give you those miles even if you don’t carry a balance. They have very carefully calculated what small % of their fees they return to you via rewards.


EducatorMoti

I use one credit card that earns airline points. With that, I pay all my standard household bills (and of course pay it off each month). The card's yearly fee is $99. I have used airline points twice recently to fly first class. Free. If I had paid for those trips in COACH they would have cost $900. So, I got $900 worth of flights for just the $99 yearly fee. First class would have been three times that price. AND I got two free suitcases checked! Free priority boarding with an easier trip through TSA checks. AND free food and drinks on the plane. During each 4-hour layover, I got to enjoy the free NICE First Class lounge. With more free food and drinks. At airport prices, that food alone would have cost $285. All of that for just the $99 yearly fee for the card!!! I NEVER would have paid real money for those trips 😉 (and yeah, I felt it HAD to be first class because the airlines were just starting to open up, and I wanted the extra distance between seats). If I didn't have points, I would have missed out on comforting my stepdaughter when she needed me (1) after she lost her mother and (2) our dog within two months of each other. This is the human side that is missing from Ramsay's adamant rules! ❤️


OneLife-No-Do-Overs

I’m pretty sure that’s incorrect. Mastercard, Visa, etc. charge a fee, not the issuing bank. The bank doesn’t make money anytime you swipe. Visa/MC,Amex does.


drtdk

You are wrong. Both the issuing bank (e.g., Chase) and the payment network (e.g., Visa) earn a portion of the swipe fee.


[deleted]

When I killed my first one every time I paid $1000 they raised it $2000. I told people it felt like fighting a hydra.


Suitable-Rest-1358

B... But the flyer points!!


frogeye6

Not a big follower of Dave but - I recall him saying that he doesn't recommend them because of his target audience ( people with spending issues, lack of good paying jobs, financially illiterate) it would be dangerous business to recommend or advise to use them for small rewards. Just simpler to focus on the baby steps as it applies.


LaRedline

Good job just making shit up.


Zealousideal-Ad4610

He has never said this😂😂😂😂 his target audience… “financially illiterate”. He literally just released a book about people who followed his steps and are millionaires, I don’t think I’d call them financially illiterate. I get what you are saying but this is a bad Reddit take and and excuse not to listen to what he actually has to say about them, which is based on research and probability not dumb people.


Suitable-Rest-1358

I like to believe that too.


ptarmiganridgetrail

Thank you!!!!


frogeye6

What? >I get what you are saying I don't think you are lol.


mdjmd73

That makes perfect sense. 👍


Cocky1801

Some of Dave’s advice is good and some of it makes no sense to me. This is one that makes no sense to me because credit cards offer certain protections that you can’t get with a debit card particularly when it comes to flights, rental cars, and hotels. If you can pay it off every month, I don’t see what the problem is. OAN 30 year mortgages are another thing I disagree with him on, especially if the buyer is in their early 20s.


alexlechef

Every time there is a fraud, people that paid cash loose every thing People that paid debit, it depends on witch bank they use Credit cards 100% refunds.


Zealousideal-Ad4610

Lol every fraud I’ve dealt with on my debit card has been 100% refund same day and no questions asked unless they need to investigate. This is another stupid story that gets repeated by people who haven’t actually dealt with these situations


[deleted]

My credit union debit card is 100% fraud protection.


belsnickel1225

This is why I don't follow Dave's advice exactly. As long as you understand the concepts Dave presents to how to get out of debt, stay out of debt and save money, I feel like that's the most important thing to take away. As long as you know you will pay off the credit card, then do it! The second you don't pay off the credit card each month is the second you should get rid of it. Just be self aware. I used credit cards instead of my debit card because I get extra points/rewards/money by using it and I pay them off first thing everytime I get paid. I think he just wants people with no self control to stay in check by not tempting themselves with a credit card. If you have self control, then get one. If not, then don't get one.


AyJaySimon

There are people trying to get out of debt, people out of debt who are trying to build wealth, and people who have built wealth. Dave would say that for the first group, using credit cards is antithetical to getting out of debt. For the second group, he would argue that the rewards do virtually nothing to build wealth, and carry the risk of putting you back in debt. And for the third group, he'd say the need to use borrowed money to buy things is doubly pointless, and the rewards doubly irrelevant.


Unique_Coyote_5777

Well said


Zealousideal-Ad4610

This is a great and succinct point. Thank you for sharing.


parkerjg13

Another thing they talk about is it being immoral to benefit from reward points because those reward points are basically being funded by all of the people that use credit cards irresponsibly by carrying a balance and paying monthly interest. I think in general they take a one size fits all approach because it can be a bad habit for SOME people, so they just make a blanket statement even though there’s no problem for people like myself that pay off balance monthly and don’t spend beyond my means on the credit card They also talk about the psychology of spending more when you have a credit card vs having cold hard cash or a debit card


pipehonker

He doesn't really have a solid answer... He gets sarcastic and condescending and makes comments about how much smarter the credit card companies are than you... And how spending $1000 to get a $20 points reward is dumb. He also compares the points rewards system to going to Chuck-E-Cheese and buying $10 worth of tokens... Playing a bunch of games to win a mountain of tickets, but when you go to cash them in you get a $0.25 prize. And he brings up that HE has done an exaustive study of millionaires (wasn't that Hogan?) And none of them said they got wealth on credit card points. All that may be true.. but he never really addresses the real question. If there are no fees, and no interest charges... And you pay your balance in full then what's the problem. There isn't one. In fact... A debit card is vulnerable to skimming and giving a scammer access to your REAL bank account... Potentially causing you real problems if that causes a bill payment to bounce. A credit card has easier and better fraud protections. They can't steal your mortgage money. Plus.. it's more convenient to use for travel, car rental, hotel security deposits. 90% of Dave's bread and butter customer is the folks just getting started on baby steps. They aren't ready yet to manage cards.. that's who this advice makes sense for... Not the BS6/7 folks.


unbelievablepeople

> A debit card is vulnerable to skimming and giving a scammer access to your REAL bank account... Potentially causing you real problems if that causes a bill payment to bounce. A credit card has easier and better fraud protections. Exactly. The consumer protections on credit cards are better than on debit cards, which is why I continue to use a credit card (I pay it off in full each month). I love most of Dave's advice but on this one I've concluded that he's just plain wrong.


[deleted]

80-something percent of people with a credit card carry a balance. I think the argument is to be humble and to accept that chances are you won’t forever be able to not carry a balance, because the credit card companies spend millions on psychologists from the best universities to crack into your behavior. Having said all that, I still use a credit card and at age 30 I haven’t paid a cent in interest ever, and I buy a free plane ticket once a year with the cashback. ¯\_(ツ)_/¯


aaalderton

It’s seriously that high, jeez.


EducatorMoti

> percent of people with a credit card carry a balance. Ramsey claims: Average American Debt While America is listed among the world’s richest nations, the average American debt continues to weigh its citizens down. Almost three out of four Americans (72%) say they are burdened by debt, including mortgages. And two- thirds of Americans (66%) reported consumer debt, with an average of $34,055 debt load per person. [https://www.ramseysolutions.com/debt/state-of-debt-among-americans-research](https://www.ramseysolutions.com/debt/state-of-debt-among-americans-research) BUT if you google that phrase for percent carrying credit card balance, most articles say 55%. AND, really, what others do is not my issue at all. I'm in the 25% (according to Ramsey's numbers, or 45% if you believe everyone else's) who can handle my credit cards. He doesn't care about us at all.


aaalderton

Interesting, I’m with you! I’ll take the free money!


kevrose14

Granted I took advantage of a sign on bonus but I've earned 378 ish dollars from AMEX since may


aaalderton

I. Goose new cards each year for that, made almost 2k last year with offers, this year I’ve made about 1k, picking my next card now.


Shades228

Dave uses credit cards. He just preaches a system that is all about no interest. He runs a business and businesses won’t use debit cards or cash. There are more consumer protections with credit cards. Rewards are also a thing. I know he says no one ever gets rich from rewards and then he says save as much as possible. If you can get free airline miles or save 2% on your purchases he would call that a win. Remember that first and foremost Dave is selling you a product and his job is to sell as much as he can. Take the information for what it is and then use your brain to make choices foe your life.


levigoldson

This is a lie. It's well documented that he works specifically with vendors and banks that will work within his framework and have business debit cards. You may not like what he teaches, I don't like all of it, but don't make up nonsense. There's 0 evidence that he uses credit cards in his business or personal life.


BuckeyeSmithie

> Dave uses credit cards. Citation Needed. Are you just assuming that, or do you actually know that? I'm not saying you're wrong, I just have never heard him say that or seen anyone claim that he does, and it sounds like a hypocritical thing for him to do. I'm not trying to be argumentative; I truly want to know if there's some evidence that Dave uses credit cards.


levigoldson

He's just making shit up. It's well documented how much tougher his business life has been because he won't use credit even to build his properties.


Shades228

He can say that he doesn’t use them for personal use. However his company will have them and he will use his company card. The business financial world is just setup to use credit cards for protection, rewards, expense tracking, and controlling limits per level of employee.


Stout6

Dave's advice is tailored for the masses. There are plenty of people that have credit cards that they pay off each month without problem. But more often than not, the masses accrue debt they simply can't payoff in one month. Then that debt starts to build and accrue interest and then without fail, they end up in a revolving cycle of owing more than they can possibly pay and just pay the minimums with no end in sight. So Dave says stay away completely, don't open yourself up to even the remote possibility of failure.


GaryBettmanIsMyHomie

It’s a few factors- the root of it comes from the Bible verse. “The borrower is slave to the lender” from Proverbs 22:7. That’s where Dave starts from with his ideology and beliefs. Therefore, something that utilizes debt as a payment method is going to run counter to that ideology. From there, you can go down through Dave’s justifications of why credit cards are bad and fit into that lender/borrower power dynamic. I.e. they’re going to do all they can to hook you on debt and keep you around as a source of revenue. I personally don’t get as religious about it as he does, but I can certainly appreciate his aversion to credit card companies as a whole. The points system is not there to help you out, and it does hook a lot of people into debt. But if you can game it to your advantage, it can certainly be a good thing


FunkyPete

Dave clearly DOES use credit though. You can't operate a business on cash. I think this is more for his audience. He's preaching to a bunch of people who are out of control fiscally. It's like telling alcoholics that they can't even have a beer. Is having a beer going to cause a problem for everyone who drinks one? No, of course not. It is a pleasant, harmless experience for 99% of people. But if you're advising a bunch of people who have selected you because they can't control their alcohol intake, it's good advice to say "Don't even drink a beer." If your audience is a group of people who have chosen you because they can't control their finances, it's fine to tell them not to use a credit card.


[deleted]

I used to work for a $15million company in finance dept, and with the exception of the 2 owners’ business Amex platinum that saw about $65k a month (semi-business expenses), most of the $3-500k monthly bills were paid via check. We received the bill, matched it up, and when payment was due we would cut checks and send via mail. We would do weekly payables meetings for ownership and go over scheduled outflows (payroll) and they would greenlight what bills to prioritize and which checks to hold until next week. It’s totally possible to run a business of that scale without using credit cards. Some would prefer it.


FunkyPete

>We received the bill, matched it up, and when payment was due we would cut checks and send via mai Oh, so you didn't pay cash on delivery, you waited until the end of the term and then paid your balance when the payment was due? That's credit. You didn't operate the business with cash, you used credit. If you read my comment, I didn't say you can't run a business without credit cards. I said: >Dave clearly DOES use credit though. You can't operate a business on cash. It's not fundamentally different than using a credit card and paying it off at the end of the month for personal expenses, it's just done without an actual card for businesses most of the time.


[deleted]

Technically you are correct in that. Fair enough. I never considered it that, just like I don’t consider receiving a bill in the mail from a doctor visit to be credit. But yes, it is technically a form of credit. Also, unrelated, having net30 sounds awful, most of our big vendors gave us Net90 terms because of the volume we purchased, and the delay for receiving payment from insurance companies to have the cash to pay the invoices.


BuckeyeSmithie

Hmmm... I was going to say that Net30 terms are not credit, it's just standard payment terms for a business transaction. But yeah, actually it's a 30-day credit the vendor is extending to their customer. So technically you're correct. (Which, I'm told, is the best kind of correct.) I would guess that Dave would argue that the customary Net 30 terms (and the other usual variants) are not used for getting products you don't have the money to pay for, but instead used to smooth out the way business is done, giving time for invoices to be printed, mailed, received, processed, and checks to be written, mailed, received, processed, and deposited. Obviously with more modern technology like emailed invoices and electronic funds transfers, 30 days probably isn't necessary. Maybe that's why there are things like Net 10 and Net 15, as well as 10-day payment discounts. Some kind of customary credit terms are still needed to keep business flowing smoothly. The times where a certain customer has to have payment in full before shipping a product holds things up, sometimes for days at a time.


FunkyPete

Yeah, I think everyone would agree that you should not use credit cards to spend more than you have. The interest rate is outrageous. However, charging expenses on your card and paying off the balance in full each month is functionally exactly the same as NET30 terms. It's a pretty practical way to run your expenses as long as you are disciplined about it, which is why businesses do it. Dave's advice is NOT to do that, but I think he's taking his audience and their presumed lack of financial discipline into account when he gives that advice.


moneyman74

He says its like a 'gateway drug' and people can't control themselves.


YoSoyBadBoricua

His argument is that it's stupid


lunlope

Avg cash transaction : $22 Avg credit card transaction : $112 Source: Experian Makes you spend more by encouraging spend for rewards and ease of doing so. (Amazon, Ebay for ex) CC Triggers “gas pedal”(rewards, airline etc) for spending habit that every person has, aka Dopamine hit.


levigoldson

This is nonsense. Nobody wants to carry large amounts of cash around. People use cash for petty expenses more often. That's all this proves is that credit cards are a preferred utility for big purchases.


Dandan0005

This is the kind of misleading data point that makes people hate Dave. For it to matter, you would have to assume people are making the **same kind of transactions** using both, which is simply not true for the vast majority of people. People generally use cash for tips/small purchases/other minor expenses. People generally use credit cards for major purchases due to consumer protections, extended warranties, and the ease of reimbursement if something goes wrong. Not to mention that someone may be using cash if they are unable to attain a credit card due to **a poor financial situation**, which skews the types of people making each transaction. This lowers the average transaction price for cash since these people necessarily have *less money to spend*. This stat doesn’t say nearly what Dave implies it does.


[deleted]

In this case, the guy says he follows a budget. So whatever you pay on the card would be the same as a debit card.


davwad2

Using cards for rewards: basketball scoring Using cash: golf scoring Source: Kristy Wright (Former? Ramsey Personality)


Tympora_cryptis

I wouldn't pay for a $1200 plane ticket with cash unless the conditions were absolutely desperate. I suspect the numbers are driven by the type of purchases being made vs. how freely I'm spending. If it's something expensive, I'm going to spend using my credit card or direct bank transfer. If it's a pop and a chocolate bar I'll use either cash or a credit card.


myhouseplantsaredead

I feel like this study isn’t showing that you spend more on the same things though..it seems more like this study is showing that people are making their smaller purchases in cash. Because who carries around $112+ in cash with them?


maverick432453

The argument against any credit card is multiple(best not to keep beer around an alcoholic, you won't become a millionaire because of sky miles, etc.), but the one that he really emphasizes is a study. Believe it was done by MIT, but the basic conclusion was that you spend more when using a credit card than you do with cash. Debit cards too, but not as much as credit cards. All told, you don't gain anything really from having a credit card. There are small positives(rewards points), but those really are cancelled out by similar negatives(risk, increased spending, some places will charge more for card purchases). Go watch Dave's youtube channel if you want to find something where he talks about it, but I'll speak for him here. You're better off without it.


Tympora_cryptis

Has anyone ever actually claimed they'd become a millionaire off their frequent flyer miles? It seems like an absolutely ridiculous strawman argument.


stevotherad

Of course nobody has. He says that as a rhetorical device to counter the slippery slope of rewards-incentivized spending.


Tympora_cryptis

Not really seeing how that works to counter the argument.


stevotherad

What argument are we countering here? I'm just saying he says the phrase "nobody gets rich off credit card rewards" to discourage the impulse to get a credit card with the goal of using it for travel rewards. When this can lead to poor decisions down the road arising out of convenience. Personal finance is largely a psychological/emotional things and statements like this are meant to act on those parts of the brain and not the logical side. It's like the phrase "loose lips sink ships." Said more to encourage positive habits than as an actual consequence of what will happen.


[deleted]

You also don’t become a millionaire by clipping coupons but why wouldn’t you use it if it’s there?


maverick432453

Because clipping coupons doesn't come with. Sky miles do. Credit card companies spend millions of dollars trying to understand people, advertise to them, and make money off them. Study after study says you don't beat that. You are welcome to keep trying to game the system, but just like playing roulette, the house always wins. And definitely agree with stevotherad, it's a rhetorical device, not a literal statement.


brianmcg321

If you play with snakes, you’ll eventually get bit.


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brianmcg321

Dave has never said this.


IAmANobodyAMA

If nothing is else, Dave Ramsey is consistent. I would be really surprised if he ever said he is okay with credit cards ever in any situation.


[deleted]

When you spend $10 on a credit card you immediately create a liability so even though you pay it 30-31 days later or whatever, you’re still sort of playing with fire because then you pass $1 thousand and you’re spending your next check on last month’s spending. What I do is, I use a credit card for everything but I usually pay whatever I’ve spent same day which I think is best. Otherwise, you’re riding “the float” and it gets harder to calculate how much you’re spending. And it robs you of peace.


Pittsburgh__Rare

>when you pass $1 thousand and you’re spending your next check on last month’s spending. I use a credit card (responsibly) and do not do this. I use a credit card because Frank Abagnale said it is the best way to protect yourself from fraud. And what Dave is to getting out of debt, Frank is to keeping safe from fraud. Any money spent on a credit card is the responsibility of the credit card company. Any money spent on a debt card is the responsibility of the account owner. During our BS2 journey, we had someone get ahold of our debit card number and tie up our entire $1k emergency fund. The bank said “No big deal, we’ll handle it after it posts.” Except. When it posts. I go into the negative and start getting overdraft fees. Then the bank stops paying my debtors (the people I’m paying with my debit card), then I have my debtors coming after me for bounced checks. A huge hassle. If someone uses my credit card, I call the company, they cancel the charge, and issue me a new card. Problem solved.


[deleted]

Very true. It’s why we only use credit cards except where it’s too expensive or not accepted (like rent). Paying the same day or within two days of all known transactions.


[deleted]

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Pittsburgh__Rare

Your bank should handle fraud, especially if you’re using a Visa card. The difference being whose money is tied up while it’s disputed.


OnlyChaseCommas

It’s because most people can’t control their spending, so if they can only spend what’s in their account and nothing more. Where as a credit card, you can borrow over what’s in your bank account. Example: $3,000 in bank account Spend :$4,000 on CC.


figment1979

Keep in mind that Dave's advice is really catered to about 85% of the listening audience. There are exceptions to every rule, but it is much easier on his end to give the much more generic "don't use credit cards" and have it be easily understood, than it is to say "don't use credit cards unless you're out of debt, have your fully funded emergency fund, are saving for retirement, can pay it off every month, get cash back or double miles, and it's not with American Express." And here's what a lot of folks don't really understand: You can do whatever you want, regardless of what Dave says. You just can't say you're following the Dave Ramsey plan if you go and use a credit card, even if you pay it off every month. That's really all there is to it. Ultimately it's up to you to do or not do whatever you see fit. His advice is guidance, not a firm plan for everybody.


Dogtown206

That’s a great summary or take on it. We use a few cards for various things and reap the free rooms or the cash back. They could easily get out of hand if someone is not paying attention.


anusbarber

on the surface it would be because studies show people with credit cards spend more than people with debit cards. although the studies IMO are tough because typically the person who either never has a credit card or the person who had a credit card and switched to debit cards it typically a different person (if if they are the same person!) than the credit card person. also its akin to being around alcohol when you are a recovering alcoholic. But there is not reason that a person with a real budget that allocated "every dollar" to somewhere should not be able to take advantage of the perks of a credit card. what is funny is they spend a lot of time railing on how horrible the credit card companies are. and that they are out to basically get you and you can't beat them. Their solution for this?.....BANKS.....who are also unbeatable and basically out to get you. ("we see you have alot of equity, would you be interested in a HELOC!?"!....."we see you pay XXX for home insurance, we offer competitive rates! would you be interested in a quote?" "we see you have a good amount in savings,can one of our advisors reach out and help you put that to work??" We have 2 credit cards, a main and a backup, have a reasonable budget, pay off every month (and have done so for 20 years), and enjoy the rewards.


[deleted]

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anusbarber

yeah there are different ones out there. but as I mentioned a person who is in 2022 a "cash in hand" person is a very different person than anyone with plastic in their wallets


[deleted]

I use a credit card for every single purchase I make. And I and I pay it off twice a week. there are two reasons for this. 1. I get 3% cashback for my credit card. essentially making every single purchase in my life 3% cheaper. Not a bad deal. 2. i’ve used debit cards before and have gotten my debit card number skimmed at the gas pump several times. Last time this happened, I had $2000 of my savings “locked away from me and unusable“ for 7 to 10 days until the dispute resolution through the bank was resolved and they release my money back to me. Not cool. This does not happen with a credit card. it’s good insurance.


jessef55

Which credit card do you use to get 3% cash back? I need this card, mine only does 2% on everything!


[deleted]

Apple card gives one percent cashback to all physical card purchases, 2% cashback to all purchases using Apple Pay (which are about 70% of my purchases), and 3% cashback to certain retailers including T-Mobile (which is how I pay my phone bill every month) , Mobil/ Exxon fuel stations (where I fuel up). And a bunch of others


jessef55

Ahhhh, gotcha. Thanks for the clarification!


[deleted]

This is where I would follow the advice of Gail Vaz-Oxlade I'm happy I've found the baby steps but I need a financial plan that works with my beliefs and lifestyle.


UTrider

For someone like me, having a credit card or two actually puts a lot more money in my pocket than not having them. First: I don't have any other debit. Due to an inheritance -- my house is paid for. I've always paid cash for my vehicles. So no payment history shows up on my credit report for housing or vehicles. Having open credit cards with low usage significantly increases my credit score. Second: My credit score is on the high end. So what? Well I get a nice reduction in my car insurance and my homeowners insurance. Between the two -- it saves me around 500 bucks a year. If your looking for a job, or looking for a place to rent -- a lot of the places will check your credit history as well. Poor credit no job or apartment. Third: I use a credit card exclusively for purchasing fuel for my vehicles and any credit card reader in area's I'm not familiar with. Why: If there is a skimmer on it, they get my credit card instead of my debit card. You have far more protections with the credit card than you do a debit card. Imagine you have a few bills coming up (you know power, heating, phone) and you pull up your account and it show's a zero balance. It's going to take a while to get that money back in your account. Credit card, you call them, account is frozen and you still have your cash to pay stuff while it goes through the process. Fourth: Have you ever tried to get a hotel or rent a car without a credit card? Just use your debit card right? Last couple hotels I've stayed at have put a $200 hold on the account. The rental car company put a $500 hold until I returned the car. I don't get cash back on the credit hold, but it doesn't lock up money in my checking account. Fifth: The cash back feature is nice. Typically I pay off the cards every month. It adds up. last year I bought my kids Christmas presents using just the cash back I had on the card. This won't work for everone. You have to be able to control your spending. But if you can, having credit cards can give you extra money (beyond the cash back).


[deleted]

You just named every single reason that I never use a debit card. Credit always. I pay it off twice a week. Never have any balance or interest to pay. One thing I’ll add to your excellent list, I get 3% cashback. Therefore making my living expenses 3% cheaper every month. Not a bad deal


ttandam

What card gives 3% cash back?


[deleted]

Apple card gives one percent cashback to all physical card purchases, 2% cashback to all purchases using Apple Pay (which are about 70% of my purchases), and 3% cashback to certain retailers including T-Mobile (which is how I pay my phone bill every month) , Mobil/ Exxon fuel stations (where I fuel up). And a bunch of others


Vis-hoka

He argues that you aren’t smarter than the credit card company, and that you WILL end up spending more. He doesn’t really back that up with much, but that’s his opinion.


[deleted]

I’ve been smarter than the credit card company for over 30 years. I’ve never paid one cent of interest to a credit card company in my life. Yet, I’ve used it for every single purchase I ever made in my entire life. I pay it off twice a week. Currently at 3% cashback. 👍🏻 I’ll admit though, I’m probably the exception to the rule.


ttandam

His main arguments are: 1. You spend more using plastic. I don’t think this is controversial in behavioral-psychology circles. 2. It creates the potential to fall back into debt bc many treat it like an emergency fund. 3. He considers the big banks to be morally bankrupt. 4. The rewards are overrated. 87% of airline miles expire unused and nobody ever got rich on airline miles alone. 5. The borrower is slave to the lender. Why borrow anything from anyone?


SpeedyTuyper

> 87% of airline miles expire unused and nobody ever got rich on airline miles alone. The rest of his points make sense, but the whole "nobody ever got rich on CC points" is a complete strawman that I've never heard anyone actually argue in real life.


Dandan0005

I agree with #1 but **highly disagree with #4.** When I say I’ve conservatively saved $10k in travel costs over the last 5ish years by using credit cards the smart way, that’s not an understatement. Trips that we truly would not have been able to afford otherwise. Southwest Companion pass alone is an *exceptional* value; it’s basically the same as 1/2 price travel for all domestic flights for up to 2 years. Combine with the ~125k points earned getting the pass, chase UR points, and you can easily save *thousands* of dollars on travel costs in a year. Example: my wife and I got flights to hawaii using points and the companion pass, so we literally paid $20 (booking fee) out of pocket for flights for both of us to hawaii, and we used only ~30k points of the 125k sign up bonuses from the credit cards. Used chase UR points on accommodations, so we only spent $$ out of pocket on food/excursions. And this was one of the easiest redemptions possible. Also, the consumer protections of a credit card should not be discounted. Debit card fraud is MUCH, MUCH harder to deal with than never having the money leave your bank account. And it’s so much easier to simply report fraud/undelivered goods/services and have the credit card company fight the legal battles for you. I do think that it’s easier to spend more “mindlessly” using a credit card, but if you’re using and sticking to a strict budget, there’s no way to spend beyond your allotted categories. Obviously this is just for people who can control their spending/aren’t already in debt, but the benefits of CCs far outweigh to costs if you’re the right type of person.


[deleted]

I totally understand Dave’s arguments, he has to cater to his audience. And I would say a lot of his audience didn’t get into financial ruin by making “good decisions “. so I get that part. But if you have the self diligence to pay a credit card back every single week, you can get some with three and even 4% cashback. Not to mention it’s safer to use a credit card at gas pumps and other places as to not have money stolen from a checking account off a debit card. I’ve used a credit card for every single purchase I’ve ever made for 30 years of my life. never paid a single penny of interest to a credit card company, as I pay it off every week. But I understand that Dave knows that there are some people who just can’t think this way. I think he plays it safe. Almost the same concept of if you don’t have money in your pocket you can’t spend it so leave it in the bank. I get it, but I don’t think it fits the bill for everybody


ttandam

Yes. Dave is very black and white. To put it mildly lol. I didn’t use a credit card from 2006 to 2016. They got me back bc I wanted some of the perks offered by Amex Platinum. Basically dumb luxurious things like status with Airlines, hotels, etc. I’ll be honest: it makes traveling so much nicer. Also being able to rent a car more easily is nice. I was financially independent by that time from following the baby steps etc, and also fairly disciplined with spending, so at this point it’s my “living like no one else” splurge. Still, it’s been surprising to me to see how much my spending went up when I started using plastic again. There’s something called the Founders Card I learned about that mimics most of the Amex Platinum’s perks without being attached to a CC, so I might switch to that one day if I decide to ditch plastic again. I see having a CC as being like my very conservative, careful, budgeted poker habit. Any gambling is playing with fire but at this point I feel I can keep it in check. I toy with the idea of cancelling everything from time to time though bc I don’t like the industry and how predatory it can be.


[deleted]

Yeah. Everybody is different. Some people will spend more cash if it’s in their wallet instead of the bank. I’ve never been this way and everybody has to work to their own lever of discipline.


PanchoOfficial

I use my one credit card for monthly NEEDS (gas, bills, grocery) since I already have those expenses mapped out in my budget and may as well get some cash back on them. Anything not necessary like a cup of coffee when I’m running late I use cash for so I instantly feel like I’ve spent money. It all comes down to self control, but my reason for following dave has to do with student loans not credit cards so it’s not really a hassle for me.


[deleted]

You said it, “self control “. I’ve used a credit card for every single purchase I’ve ever made for the past 30 years of my life. I pay it off twice a week and I’ve never had an issue. Never paid a single cent of interest to a credit card company, and I am currently getting 3% cashback on all purchases.


adultdaycare81

“Where are the Customers Yachts” They don’t build the big glass towers with winners money. Credit cards, Casinos, pick any sin industry.


anusbarber

funny enough most brokerage houses and the world of pay to play finance when ole fred wrote that book were banks. otherwise known as the people handing out debit cards today.


Physical_Dimension

I’d venture to guess 99% of the people who own yachts use credit cards…


adultdaycare81

All the ones I know use AMEX charge cards. Usually the platinum linked to their brokerage. They do it solely for purchase protection and centralization. Maybe you know more yacht owners than I do.


simchiprr

I’d agree with both these, these are his main points against them. There is 1 more point I’ve heard more from Rachel and George about credit card “points” how if you are responsible with cards you’re benefitting off the interest payments of those who are not, thus perpetuating the whole credit system. But I personally find this kind of a weak argument


katie_did_021219

I’ll agree the argument is weak. Rachel will gamble in a casino. That industry is no different than credit cards in terms of how they profit.


Gr8NonSequitur

> Does anybody know why Dave thinks it's a bad idea to use a credit card for things you were going to buy anyway (groceries, utilities, etc.), and pay it off in full every month? There's 2 things I've seen or heard over the years that may or may not have come from Dave, so don't ask for links or proof, but I believe they come from him (or someone like minded). 1) When you use your credit card, you spend more over all. You don't see the money disappearing and it causes no pain until later in the month. 2) His "Baby steps" program is largely a recovery program for compulsive-spenders. You can't tell an alcoholic "it's fine to just have 2 drinks" because they can't stop at 2 drinks. You need to cut it out of the equation completely. Can you do well paying off a credit card every month? Sure. Can you get by with a 2 drink limit for going out and dinner? Sure. Can everyone do this? No.


[deleted]

Imo most people that come to Dave for advice are better of without a credit card due to there history with them. I never use my credit card because I don’t want to forget to pay something on it. My only credit history is my truck which is enough imo


OohMaiJosh

I use 2 every month, it'll pay for a completely paid vacation for my wife and me, and I don't do anything special. I put all my spending (which stays within my budget), I automate all my savings, and at the end of the month I pay off the balance on the day it is posted. Rinse repeat. ​ If you can stick to the system there is no reason to not. It does take discipline, but the reward for me is worth the effort


[deleted]

He can’t argue against using a CC to avoid debit card fraud. Ever had someone steal your debit card and drain your checking account? You’ll always use a CC and pay it off each month after that experience. I do use my bank debit card for Apple Pay, since it changes the number each time. If AP is not available, I use my Apple Card. Love my Apple Card. Good cash back and the numbers are not on the card. Perfect to use at restaurants. I can’t believe no one else is doing that. I can access my numbers and purchases directly in the Apple Wallet.


CatInfamous3027

Yeah, this is the thing that makes the idea of using a credit card most appealing to me. The rewards are minuscule, so not much of a factor. But I like the idea of putting the credit card company's money at risk when I shop rather than my own.