Why are some so against credit cards?

[disneysteve]

I think it goes to Monkey Mamas point, which is that Dave is primarily focused on helping people get out of debt and back onto their feet, many of whom indeed are struggling under a mountain of credit card debt.

I totally agree with this. People who are dealing with debt, especially credit card debt, or otherwise don't have their spending under control should not use credit cards. Dave just generally says nobody should ever use credit cards. That's where I disagree.

[GREENBACK]

Dave Ramsey has, admittedly, tasted the cruel sting of debt. I wonder if credit cards were part of that and that's why he's so opposed to them. I don't follow him very much but it does seem like he has a one size fits all attitude about finances.

[ActYourWage]

Dave Ramsey has, admittedly, tasted the cruel sting of debt. I wonder if credit cards were part of that and that's why he's so opposed to them. I don't follow him very much but it does seem like he has a one size fits all attitude about finances.

I believe so. He deals with people every day that are being harassed by collection companies for the credit card companies which has left a bad taste in his mouth. If I'm not mistaken, when he was in debt, they would call and his wife would get harassed by the collection agencies. Now, whether that is from the credit cards or other, I'm not sure. Again, I'm not sure if that happened directly to his family or was a caller on his show, but I do hear people on his show talk about being harassed to the point of tears.

[disneysteve]

Dave Ramsey subscribes to a basic tenet that all debt is bad and to be avoided with the sole exception of a 15-year fixed rate mortgage with a monthly payment not exceeding 25% of your take home pay.

Where he and I differ (among other places) is that I don't consider using a credit card to be debt. It only becomes debt, in my mind, if you don't pay the bill in full when it is due. If I have $1,000 cash in my hand and make a $1,000 purchase with my credit card and then use the $1,000 cash to pay the bill, I don't feel that I ever went into debt in that process. He, and many others, equate using a credit card with going into debt. I understand that mindset. I just don't agree with it.

[dczech09]

I believe debt too should be avoided. With the exceptions of student loans and mortgages that are REASONABLE.

I do not see swiping a credit card as being in credit card debt. To me, one is in credit card debt once a balance is rolling to the next month and interest is being applied.

There is obviously a subset of people who do fine with credit cards; myself included to the extent that I use them for business trips. I made the 18% statistic remark earlier to play devil's advocate. I actually heard that statistic from Dave Ramsey, but I for one cannot find a legimate source that actually shows where the number came from. But you know what they say about statistics: 80% of them are made up on the spot

[afreshup]

As stated in the comments, there are pros and cons to using a credit card. I believe that many people want instant gratification and are willing to rack up credit card debt in order to get what they want. In addition, many more people lack personal responsibility, won't do their research to find the right card, won't pay the balance off in full, etc. Then, they complain that they had no idea what the interest rate was and say it's really not their fault. If someone can't understand basic math and take the time to know what they are signing up for, they should not get a credit card!

[photo]

We are 24 years old, and he told me he's never had a credit card and still doesn't. I've told him many times the importance of building up credit and the rewards alone I get back make it worth it (when someone will give you hundreds of dollars a year for free...you take it!).

Some people just want simplicity -- no worries about losing the card or someone stealing the number. Although I use credit cards a great deal (yes, those lovely green rewards), some people just aren't great with details and would prefer not to deal with them. If the person is responsible and pays his other bills on time and is content, then he shouldn't be hounded for not having credit cards. It's certainly better not to have a credit card than to have one and not give it proper attention.

[wincrasher]

I love my credit cards!

I don't have to carry a wad of cash around.

I get 5% off my purchases at Lowes.

I get points I can use to buy things at Amazon.

I get a nice statement each month showing where all my money is going.

I have the spending power to take advantage of unexpected deals.

I get extended warranty coverage on most items.

I have greater consumer protections with merchants/ greater leverage for returns.

What's not to like?

[disneysteve]

I have the spending power to take advantage of unexpected deals.

Can you clarify this point? I think I know what you mean but others may read this as being able to buy something that you don't have the money for.

[jpg7n16]

And for the record I'm talking responsible people with capacity to control their money and pay it off.

I think this is the problem here. A faulty premise.

Some people can handle CCs, others can't. Some people can handle alcohol, some can't. Some can control themselves at a casino, some can't.

Does that mean that if you can control yourself with alcohol consumption, you are obligated to drink? No. Am I going to berate someone for forgoing all alcohol or gambling because they don't want to tempt themselves with destruction? Nope. That's their choice.

Likewise, does that mean if someone has the control to handle their debt, they are obligated to use CCs? Nope. And if someone wants to forgo all CCs because they don't want to risk financial destruction, then best of luck to them. Maybe they've seen their loved ones struggle and just want to avoid it in the first place. (You can make a lot of parallels there)



For the record, I use CCs, I like getting 5% back on gas, I don't drink alcohol, and I gamble periodically. All of which I feel are done responsibly

[disneysteve]

For the record, I use CCs, I like getting 5% back on gas, I don't drink alcohol, and I gamble periodically. All of which I feel are done responsibly

I use credit cards, drink and gamble. Not sure what that says about me.

[wincrasher]

Can you clarify this point? I think I know what you mean but others may read this as being able to buy something that you don't have the money for.

What I mean is that, if I see something that is a terrific bargain, I don't have to worry about if I have the money in my pocket or in checking. I can get the deal and pay the bill when it comes.

It does not mean that I buy something just because it is a good deal.

But there usually are of handful of things I'd like to get, but I can wait until they go on sale. So when they do, I'm ready to go.

[jpg7n16]

I use credit cards, drink and gamble. Not sure what that says about me.

That if the blackjack tables in Vegas start taking credit cards, watch out!

[jpg7n16]

What I mean is that, if I see something that is a terrific bargain, I don't have to worry about if I have the money in my pocket or in checking. I can get the deal and pay the bill when it comes.

Agreeing w/ DS, this again sounds like a variation of, "well I don't have the money right now, but I can go ahead and buy it today"

Where do you get the funds to "pay the bill when it comes"??


I rarely carry cash, so I feel you there - but I always have enough in checking to cover whatever I'm doing on the card.

[disneysteve]

Agreeing w/ DS, this again sounds like a variation of, "well I don't have the money right now, but I can go ahead and buy it today"

Where do you get the funds to "pay the bill when it comes"??

Actually you aren't agreeing with me. I do the same thing as wincrasher.

The point isn't that we spend money we don't have. The point is that we have the money but just don't carry it with us.

It is true that if I go to the store with $50 cash I can only spend $50. But if I only go to the store with $50 cash and they are having a huge blowout sale on something that we use regularly, I won't be able to take advantage of the sale. With a credit card, I can snap up the good deal which saves me money in the long run.

Where do I get the funds to pay the bill when it comes? It comes out of savings and current income. The tremendous benefit of choosing to live below our means is that there is always a surplus of funds. We always have a few thousand dollars extra in our checking account and that's above and beyond our scheduled savings, Roths, 529, etc.