According to Dave Ramsey, could credit card rewards make me a millionaire?

[Nika]

He is sending me conflicting messages on that one. On one hand, he is repeating that all the millionaires he met did not get there by getting reward points on ccs.

On the other hand, I am averaging close to $1,200 a year in cc rewards. And, if, according to DR, I just invest $100 a month at an easy to find almost guaranteed 12% return, I will be a millionaire. So, cc rewards could make you a millionaire.

Which one is it?

[DinoSaur]

An easy to find, almost guaranteed 12% return? Wow. Seriously?

I'm extremely sceptical about that.

[Nika]

An easy to find, almost guaranteed 12% return? Wow. Seriously?

According to DR, that is not hard to do at all.

[MonkeyMama]

Yes, I always kind of roll my eyes when he goes off on credit card rewards. (I easily made $15,000 in credit cards over the last 8 years or so). & to me, that is *substantial* in wealth building. An extra almost $2k per year??? While barley lifting a finger?? Clearly enough to be a millionaire, with his "12% returns." & certainly the kind of financial loophole that "on the road to wealth" people take advantage of.

But for his audience, I think it is fair enough. His core audience does not need to chase credit card rewards. 99% of the population spends more with credit, and his core audience is a group that has been in a lot of credit card trouble. I've even heard him admit to callers like me exactly that. That sure they are fine and doing well with it, but that is not his point. Most his listeners are better off avoiding credit cards entirely.

[phantom]

Dave Ramsey would probably call into question whether or not having the credit cards really nets you the $1200 that you think it does. He seems pretty firmly convinced that it is impossible to have a credit card and not spend more than you would without one. That being the case, you would have to subtract all the extra you spent from the cash back you got to find out what you gained by having a credit card.

I happen to think he's wrong and that there are some people who are perfectly capable of using a credit card and not spending extra. But, I think that would be his main argument as to why you can't actually use your credit card to become a millionaire.

Also, in order to get $1200 in rewards, I would think most people would have to put at least $24,000 a year on credit cards. (That's assuming they get 5% cash back on all purchases or something less than 5% plus some signup bonuses.) Assuming most people cannot pay their bills with credit cards, that would mean spending $2000 a month on gas, groceries, eating out, and consumer goods. Most people who could can afford that much spending, could probably become millionaires more quickly by cutting back monthly spending by a few hundred dollars. Either way, it would be bringing in so much money that really did the trick, not the credit cards.

Note: In the paragraph above, I am not talking about you specifically, Nika. I'm just speculating on what the average Dave Ramsey caller that gets told to cut up the credit cards because they won't make him a millionaire would have to do to follow your method.

All that said, once we have a million dollars, I have to admit that my husband really wants to call Dave Ramsey and tell him that he's a millionaire and owes it all to his credit cards.

[bjl584]

He is sending me conflicting messages on that one. On one hand, he is repeating that all the millionaires he met did not get there by getting reward points on ccs.

On the other hand, I am averaging close to $1,200 a year in cc rewards. And, if, according to DR, I just invest $100 a month at an easy to find almost guaranteed 12% return, I will be a millionaire. So, cc rewards could make you a millionaire.

Which one is it?

While it is unlikely that anyone got to be a millionare by receiving credit card rewards, it's also unlikely that anyone got to be a millionare by being frugal, and it's probably also unlikely that anyone got to be a millionare by slugging it out 40 hours a week at work, and probably not too many people got to be a millionare by investing in the stock market.

But, when you combine all of those factors, then you have a good opportunity to build substantial wealth.

The thing about Dave Ramsey is that he did not get rich by cashing in credit card rewards. That's fine for him. But the rest of us don't have a national radio show or several best selling books. So, I will use whatever tool that I have available to make it to a million and beyond. Maybe he isn't being hypocritical, but I think he is out of touch.