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Dave Ramsey’s Hatred of Bankruptcy and Credit Cards Makes No Logical Sense


I should probably never preface an article with this but here goes. If you are a die hard Dave Ramsey fan you are probably going to disagree with what I have to say. I get it. But all I ask is that you read the post, think about it, and then let’s engage in a discussion in the comments section below.

For the rest not blindly mesmerized by Dave Ramsey, consider that dealing with debt and credit is a balanced approach. Like many things in life, large swings, to one side or another leave you out of balance.

From time to time people bring up points that apparently the personal finance guru Dave Ramsey has taught or stated. So I thought I’d take a close look at what he had to say.

Rather than make any assumptions based on what I heard from people I instead went to Dave’s site and researched them for myself.

Dave Ramsey Says, “Responsible use of a credit card does not exist.”

Dave Ramseys Hatred of Bankruptcy and Credit Cards Makes No Logical Sense

Dave also says, “There is no positive side to credit card use. You will spend more if you use credit cards. Even by paying the bills on time, you are not beating the system! But most families don’t pay on time.” – Source

But the fact is that most consumers do pay their bills on time. At the time of this article, only 2.75 percent of credit cards are delinquent. That means 97.25 percent do pay their cards on time. Certainly that’s “most families.”

According to Time magazine, about 45 percent of card users carry a balance from month to month. But 55 percent, do not. – Source

But I disagree with all of that. We can’t assume that people are stupid and can’t learn to build better awareness about how to manage their debt. One of the great teachable moments is by learning from mistakes.

If responsible use of credit cards does not really exist then how can people exercise responsibility when owning sharp kitchen knives or driving down a road with only a painted line separating them from oncoming traffic?

More often than not, people are responsible and can operate things appropriately. We can’t begin with the assumption that all people are idiots.

Responsible use of a credit card does exist. And less than half of all people carry balances month-to-month on their credit cards.

Credit cards also provide consumers with greater financial security. When a transaction goes wonky and the incorrect amount gets charged or you have a problem with a merchant, using a credit card prevents that disputed amount from hitting your checking account. It provides you with a financial buffer.

A debit card is an electronic check. You would no more hand a waiter at a restaurant a blank check for them to take it to pay for your meal but that’s exactly what you do when you hand that stranger your debit card. We just never think about it. And one reason is this continued argument that debit cards are better than credit cards.

Ramsey says, “If you “have to” use plastic, I suggest a debit card. I use them for travel and the occasional convenience of ordering something over the Internet or phone. Other than that, I use cash.” Awesome, but have you tried to rent a car with a debit card or cash? Many places just won’t do it. If you had a credit card, then there is no problem.

Ramsey tells readers “You cannot beat the credit card companies” but that’s simply not true. Just pay your bill off in full at the end of the month and the credit card company will make no money off interest, no matter what interest rate they charge.

And the good use of credit builds a great credit score which will be invaluable if you want to buy a house, get the lowest rate mortgage, pay less for car insurance, etc. There is no downside to having a great credit score if you are managing your finances well.

But Ramsey seems to think other issues in life do not need such aggressive action or blanket elimination, like gun control.

Tweet Source

So if people should have a right to bear arms, and I’m not saying they shouldn’t, and I’m assuming they can do it responsibly, then why can’t people bear credit cards with equal responsibility?

Let me put this into a different light. What if we took Dave’s words and instead substituted a gun related word instead for credit card, would it becomes a message that would alarm his followers.

From Dave’s Page The Truth About Credit Card Debt

Myth: Aren’t there positive uses of a [gun]?
Truth: Responsible use of a [gun] does not exist. [Guns] are a major problem in America.

There is no positive side to [semiautomatic weapon] use. You will [shoot] more if you use a [semiautomatic weapon].

Use common sense. When you play with a multi-billion dollar industry and you think you’re going to win at their game, you are naive. You cannot beat the [gun] companies.

All of a sudden the imbalance in the statements seems extreme, doesn’t it? So if Ramsey feels people can’t handle credit cards and should not own them then should we take all the guns away from people as well?

How about we just use both of them responsibly, like adults.

Dave Ramsey Says, “Bankruptcy is a gut-wrenching, life-changing event that causes lifelong damage.”

Bankruptcy is not something I recommend any more than I would recommend divorce. Are there times when good people see no way out and file bankruptcy? Yes, but I will still talk you out of bankruptcy if given the opportunity. Few people who have been through bankruptcy would report that it is a painless wiping-clean of the slate, after which you merrily trot off into your future to start fresh.

Don’t let anyone fool you. I have been through bankruptcy and have worked with bankruptcy for decades, and it is not a place you want to visit. Bankruptcy is listed in the top five life-altering negative events that we can go through, along with divorce, severe illness, disability, and loss of a loved one. I would never say that bankruptcy is as bad as losing a loved one, but it is life-altering and leaves deep wounds both to the psyche and the credit report. – Source

As a result of my experience, I don’t like bankruptcy. Do I hate it? Yes. I always look for another solution. – Source

Dave imparts this negative connotation about bankruptcy to his flock. But why the bias?

Bankruptcy happens to be the only legal intervention tool to allow people to deal with their creditors and in fact to create a binding repayment plan when creditors can’t agree.

Some people say that bankruptcy is immoral because you wipe away your debt but there is nothing that prevents anyone from repaying their creditors in full as they best can, after they get the protection bankruptcy offers. Is that immoral?

So the belief is that bankruptcy is somehow corrupting or as Ramsey says, an “event that causes lifelong damage.”

How about we put continued financial misery in the same category as spousal abuse? Should we not try to do everything to avoid that? Why stay in an abusive relationship that’s bad for the kids?

Dave is entitled to his opinion. But the facts don’t support his statements. If we look at bankruptcy purely from a religious or faith based point of view then we need to consider these points:

  1. Is Bankruptcy Sinful and Bad or Right and Moral? An Examination
  2. What Does the Bible Say About Bankruptcy? Is Bankruptcy Scriptural?
  3. The Ethical Considerations of Bankruptcy

If we look at bankruptcy from a reality and practical point of view then we need to consider the following:

For all those that think bankruptcy is a last resort, I’d love to show you the damage you’ve done in espousing that fairy tale. I’ve watched countless numbers of people lose everything just to live up to your imaginary and fictitious belief that bankruptcy should be a last resort.

In order to avoid bankruptcy, people will sell all their assets and limp along till they hit the wall, broke and without options. They will drain their protected retirement accounts, just to avoid bankruptcy. They will believe the sales pitch of debt relief companies and credit counselors that the widget those companies are selling is better, because bankruptcy should only be the last resort.

I’ve written about the “last resort” marketing message many times. And each time it was used as a way to scare or persuade the consumer to stay away from bankruptcy and buy the peddled debt relief product instead. But the reality is that in the face of no other reasonable, logical, or good options, bankruptcy should often times be the first option to investigate on the list.

Bankruptcy is also often the least expensive way to deal with debt in the shortest period of time. And for most people that file bankruptcy, their debt will be eliminated in a few months, and their retirement funds will be protected from creditors. Those funds will be protected for when they need them most, when they can’t work and need to be able to feed themselves.

Here is a better statement of fact about bankruptcy, it’s not the first or last resort, but one of the options consumers have to deal with their debt. There is no way to know if bankruptcy is the most appropriate solution in a particular situation unless the consumer talks to a local bankruptcy attorney.

And if you press people on why they say bankruptcy should be the last resort, ask them this, “why?” I bet they come back with more myths like it will wreck your credit for ten years or it will prevent you from getting a job. Both of those myths are substantially unsupported. The reality is that it’s silly easy to rebuild your credit after bankruptcy and the facts don’t support widespread employment discrimination after bankruptcy.

Another common excuse I hear is that bankruptcy is immoral. That’s another argument based in perception rather than reality. There is no reason why someone can’t file bankruptcy to get legal from unreasonable creditors and then begin to rebuild their life and elect to repay creditors. There is also the issue of if it is more moral to leave yourself and family stranded in an unsafe life or financial position while you limp along for years trying to repair the past.

If bankruptcy is the right solution for churches, airlines, and cities, then why can’t it be the right solution for you?Click to Tweet

For more on this you can read a previous article, Dave Ramsey and His Un-Truth About Bankruptcy.

I went bankrupt, just like Dave did. And I admit at the time it was painful. But the reason it was painful was because I didn’t have someone there helping me to understand all of my options. If I had I would have walked into bankruptcy knowing that for me, at that time, bankruptcy was the best option for me. Not life destroying.

You can view my story below.

The reality, is that for me, like for Dave, bankruptcy allowed us to get a legal fresh start and second chance.

A couple of years after we had rebuilt our good credit, purchased a home, and I had a great job with IBM.

Just because we wound up not liking the customer service our bankruptcy attorney delivered, it didn’t mean that bankruptcy was not right for us. In fact, without our bankruptcy experience I wouldn’t be here, just like Dave wouldn’t be probably, helping people.

If there had been someone at that time who could have helped us to understand the process and learn that bankruptcy was not the end of our life but the start of a new life then the pain we felt at the time would have been mitigated.

Just because something might be painful
doesn’t mean it’s not right.

I’m not suggesting that everyone should file bankruptcy to deal with their debt situation. What I am saying is that before anyone can make a fully informed decision about any path out of debt they need to be educated about the realities of the options.

Dave’s statements about his truth about bankruptcy just seem odd to me.

He says, “Too many bankruptcy filers never really recover from their financial distress because they never learn new ways to manage their money.”

Yet the rate at which people file bankruptcy again is very low.

He says, “As a result of that experience, Dave hates bankruptcy. That’s why, when someone asks him about whether or not to file, he’ll always try and help them find a better solution.”

Yet I went through a similar experience at the same time and I’m saying that bankruptcy is often the most logical solution.

He says, “Without a doubt, it’s a long process that will follow you around for years, even after it clears off of your credit report.”

But not being able to make your minimum payments and being delinquent on your debt will stay on your credit report for the same seven years as a chapter 13 bankruptcy does.

Dave Ramseys Hatred of Bankruptcy and Credit Cards Makes No Logical Sense“That said, Dave doesn’t tell his listeners to never file for bankruptcy.”

Yet, that makes no logical sense. Why tell people they should never consider the one and only legal solution written into our Constitution to allow people to get a legal fresh start from their debts?

Bankruptcy in the United States is governed under the United States Constitution (Article 1, Section 8, Clause 4) which authorizes Congress to enact “uniform Laws on the subject of Bankruptcies throughout the United States.”

The Congress shall have Power To…

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

But Dave appears to have no problem defending the Second Amendment to the Constitution and protect an individual right to possess and carry firearms.” Guns good. Bankruptcy bad.

Just Think It All Through for Yourself

Everyone deserves to know the facts and truth about dealing with debt. I encourage everyone to just not be a blind follower of either Dave Ramsey or anyone else, including myself.

Before you let others tell you what is best for you, find out what is best for your situation and make a fully informed decision about how to tackle your debt based on the facts and not someone else’s lingering fear and regret.

I’d suggest you first read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.

Then use the free How to Get Out of Debt Calculator to review your options.

Once you’ve identified a company you want to work with, then follow my step-by-step guide on what you should look for and expect from a good debt relief company.

You can also always feel free to contact me for free help.

Dave Ramseys Hatred of Bankruptcy and Credit Cards Makes No Logical Sense
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Dan

    Ok, so I listen to Ramsey but do not consider myself a fan ( that is just creepy if people do) I do agree with him in that you should try to pay back your debts, however it should not ruin your life paying creditors back who don’t play fair anyway! I do not agree with him about never filing for BK, and that is is the worse thing in the world, most people who file have credit a couple years later, and I can attest, I have had great credit before and companies still find a way to f—-you out of more money especially mortgage and auto companies- they will will find a way! My real issue is this whole gun control issue you bring up- I do not know what your stance is but not sure why you bring this into the debate- Dave is a much higher caliber that you ( pun intended) so you are actually embarrassing yourself even mentioning him. Don’t get me wrong Steve I know you are a smart guy- we actually know some of the same people and I am not trying to disrespect you buy Dave sells millions in advertising and you are operating a ” click through” web site in which your followers are allowed to post complete nonsense without any fact checking on anyone’s part . Before you ask me of an example just read through most of your loan modification blog about Prudent law firm, they are complete crooks however most of the people that posted ” questions” never even sent them money- you have a blog with the ramblings of a man around 1am about an ex employee and a guy name Derek who use to do his processing- The man could not even spell correctly and obviously had an ax to grind and you gave him the forum to do it which really killed your creditability- Again, stick to what you know is helping people with debt relief questions and leave the “Bill of Rights” out of your forum.

    • http://GetOutOfDebt.org Steve Rhode

      The article is not about gun control in any way. The only issue I raised was, “But Ramsey seems to think other issues in life do not need such aggressive action or blanket elimination, like gun control.” As evidenced by his tweet which I show. My point was that it appears Dave is not in favor of blanket action, like gun control. That’s it.

      As I said before in another comment, the issue about being pro-gun only has to do with responsibility.

      If we want people to be allowed to own guns then don’t we assume they will act responsibility. Can’t they certainly be responsible enough to own credit cards? Or are Ramsey’s word true, “Responsible use of a credit card does not exist.”

      As for your other issues, people do submit questions and the site answers the submitted questions based on the information given. If there is something that is factually inaccurate in any answer given on the site, every Q&A has a “report an error” button on it to let us know.

      You appear to take issue with ramblings of someone that submitted a question or left a comment, but we allow people to state their position and/or express their opinions, just as you’ve been able to do.

  • Slaw76

    To the author: Your attempt at analogy with his statements about guns is flawed because his gun comments were about the stupidity of the gun prohibitionists trying to confiscate guns from private individuals, whereas his credit card comments (however silly one may think) are his personal opinions about credit cards. Nowhere have I seen him advocate confiscating credit cards.

    • http://GetOutOfDebt.org Steve Rhode

      I think you missed the point. He doesn’t mention anything about the confiscation of credit cards. The point was about responsibility. How can people be smart enough to know how to exercise responsibility with guns but not credit cards.

      • Slaw76

        Actually, I think you missed my point. The fact that he doesn’t mention confiscating credit cards is my point. Your attempt at an analogy (with the gun grabbers) conflated his opposition to gun prohibition (i.e., government busy-body meddlers taking peoples’ guns away) with his opposition to credit cards, which is just his personal opinion and has nothing to do him advocating for credit card confiscation. For your attempt at an analogy to be correct, he would have had to have advocated that credit cards should be prohibited by government action.

        I understand the point you were trying to make. I simply reject the premise of your attempt at an analogy.

      • http://GetOutOfDebt.org Steve Rhode

        Nope. I got it.

        But the point I raised in the article was about responsibility and had nothing to do with any form of gun control.

      • Slaw76

        I understand that was your point. Listen, I’m also a bankruptcy attorney.

        My only point was that the analogy was flawed. I may be particularly sensitive about this subject because I have a definite opinion on the meddling busy-body control freaks proposing new gun prohibitionist measures, as if they will end any better than the other idiotic prohibitions enacted by the national government (e.g., alcohol).

      • http://GetOutOfDebt.org Steve Rhode

        Dave says, “Responsible use of a credit card does not exist.”

        The point I made in the article was Dave was pro-gun (no problem with that), “So if people should have a right to bear arms, and I’m not saying they shouldn’t, and I’m assuming they can do it responsibly, then why can’t people bear credit cards with equal responsibility?”

        It was just a point of extending out the logic, not about meddling with guns or credit cards.

      • Slaw76

        Yes. But you also wrote: “But Ramsey seems to think other issues in life do not need such aggressive action or blanket elimination, like gun control.” And then you quoted a tweet of his that stated: ” Hey DC, you wanna confiscate all guns? Start with TX and TN and see how that goes for ya. Better pack a lunch. — Dave Ramsey (@DaveRamsey) December 3, 2012,” which is why I thought the analogy was flawed. Thanks for clearing it up.

      • http://GetOutOfDebt.org Steve Rhode

        Ah yes. I see where the confusion was now. I was just using that tweet to support the position Ramsey was pro-gun. That was it.

        Thanks for talking this through.

      • Jml

        Having credit cards is like playing with snakes eventually they will bite you the only way to get ahead is to not play the credit card game and get rid of credit cards

      • http://GetOutOfDebt.org Steve Rhode

        You should stop driving and using sharp knives as well.

      • Jml

        That has nothing to do with this no comparison at all

      • http://GetOutOfDebt.org Steve Rhode

        Actually they all require awareness and personal responsibility to use safely.

      • Jml

        In my view you can have personal responsibility without having or using a credit card and that is no comparison to driving or using knives and by the way I have been a year without credit cards and I can do everything I want to do no problem whatsoever

      • http://GetOutOfDebt.org Steve Rhode

        No debit cards either?

      • Jml

        Debit card is better than a credit card any day of the week and I have no problems with my debit card which I rarely use I don’t overspend I can walk by or drive by anything without feeling the need to buy something I don’t need I will take a debit card anytime you could not pay me enough to have a credit card again ever the terms would never draw me in to have anther credit card I threw away 2 offers this week there burned up and gone

      • http://GetOutOfDebt.org Steve Rhode

        You are free to believe what you want but the facts do not support your statement.

        A credit card and a debit card are similar in that they both utilize the same data networks and compensate MasterCard or Visa with transaction fees. Both are electronic tools to engage in the transfer of money between a buyer and seller.

        However, where they differ is in how that transaction is completed. A debit card is essentially an electronic check. You are giving someone direct access into your bank account. Mistakes happen and either intentionally or unintentionally significant losses have occurred specifically from debit card use.

        A credit card on the other hand provides a buffer between the merchant and your checking account. If an item is incorrectly charged or fraudulent there are mechanisms to deal with this before it causes a financial loss.

        Another difference comes in how the cards are authorized. While the pre-authorization for a transaction is technically similar, in that a mortgage or hold is placed on your account for the estimated final transaction. A debit card places a hold on these funds in your checking account. A credit card does not.

        Debit cards and credit cards are actually regulated under different laws. Not sure if you knew that as well.

        And finally, there is nothing that prevents you for getting the greater consumer protection of a credit card and paying for your transactions in full as you incur them or even weekly.

        What I do hear you saying is that for you, you feel you cannot exercise the personal responsibility necessary to use a credit card without letting the balance spiral out of control so you instead rely on the less safe debit card for your transactions. That’s fine if that’s the case but labeling this as “debit cards are better” would not be the real reason.

        I invite you to examine the facts behind debit cards and credit cards more closely so you can make a fully informed decision.

        Debit cards are regulated by the Electronic FundsTransfer Act whereas credit cards are protected by the Fair Credit Billing Act and the Truth in Lending Law.

        Here is what the Federal Reserve Bank has to say about the differences in liabilities and use http://www.frbsf.org/publications/consumer/plastic.html

        You can also read http://getoutofdebt.org/19328/credit-card-or-debit-card-the-great-debate or http://getoutofdebt.org/5792/debit-cards-less-safe-than-credit-cards-please-use-your-credit-card-online

      • Jml

        How dare you make judgement about me like that and like I said before I have never had a hold put on my account you will not talk to me like that and you will not treat me like I do not know what I am talking about I will not do business with scum of the earth and credit card company’s are scum of the earth I don’t care what you think and I don’t care about your advice I know what I am talking about anyone that knows me knows different I can handle more credit than you could imagine you will not con me so don’t you ever make judgement on me or how I handle my money ever again I will stay ahead of everything your full of crap making a bold statement like that saying I can’t handle credit your full of shit

      • Jml

        And I will not be bullied with crap like that

      • Jml

        U do not know me and your mind is telling you wrong I know what I am doing

      • http://GetOutOfDebt.org Steve Rhode

        I was just trying to help educate you about the realities and facts behind the use of a credit card and debit card so you could be a well educated user.

        I extrapolated your use and favor of the less safe debit card and your previous comments of “Having credit cards is like playing with snakes eventually they will bite you the only way to get ahead is to not play the credit card game and get rid of credit cards” and your comment on FB about credit cards of “I can’t agree with something I do t believe in or something that doesn’t work especially since I have been down the debt road 4 to 5 times and I always paid it off and then right back into debt year in and year out knowing credit cards are no good” to indicate you struggled with credit card use. If I was wrong, I apologize if you took offense to anything I said.

        You call the credit card companies the “scum of the earth.” Just sticking to MasterCard and Visa for this discussion a electronic financial transaction device (credit or debit) is made up of three parts.

        1. The data and trademark association, MasterCard or Visa.
        2. The national or local bank issuing the card (debit or credit).
        3. The bank lending the money behind the card (credit or overdraft if debit).

        The only difference in the two cards is the liability and laws that govern each and possible the bank behind the card.

        When you use either a debit or credit card the MasterCard or Visa association still makes a fee and the issuing bank makes a fee. There is no difference between the cards that way.

        So your apparent objection is that credit cards lead people into debt. But when you pay off your credit card in full as the majority of card holders do, no matter what the interest rate is, you pay no extra to use the card, do not go into debt and receive all the advanced consumer protection that comes from using a credit card over a debit card.

        So besides your gut level objection to the use of a credit card, please help me to understand what you feel is the factual difference between the cards that creates your concern in general for people using a credit card when it is clear that a credit card offers better consumer protection from its use?

      • Jml

        You have never had on and off income you and I view things different by having a credit card you go into debt to buy what you need and you pay it back in 30 days try having an income that’s once a year and you go pay the debt back when you get paid there goes your profit I have never struggled I have always made things work I really don’t care if u see it from my view point I am done playing the credit card game if a payment gets lost u issue a new payment pay late fee and interest I am not going to do that anymore like I said I have had credit cards before I am done with that I will just have to take my chances on consumer protection I guarantee I will not have any problems whatsoever I am more concerned about keeping what is mine and I have read the reviews on your services I know

      • http://GetOutOfDebt.org Steve Rhode

        That’s a big assumption on your part. But if you could not afford to pay the bill as you incurred the charge or even pay it off weekly, then how could you afford to use a debit card in the same situation? Would the money not be there either way?

        If you pay your credit card bill online through the issuing bank site it does not get lost in the mail.

      • Jml

        You continue to miss the point with me I don’t care about online payment I don’t care about credit cards I will not have a credit card ever again you never get ahead when you own a credit card and I don’t care if you view it the same I am not supporting the credit cards I am going to keep what I make and what part of no do you not get on having credit cards I won’t own or have a credit card

      • http://GetOutOfDebt.org Steve Rhode

        And you miss my point that by using a debit card you still make money for the same banks and trade organizations you stand against.

        I don’t care if you don’t want to own a credit card. That was never the point of this discussion. My participation was merely to correct information and beliefs that were inaccurate and not supported by the facts.

      • Jml

        I know the facts the more you tell me I am inaccurate the more I am right and on target to greatness I don’t care what they do sure they will make money but only if I spend it

      • http://GetOutOfDebt.org Steve Rhode

        If you dispute the facts I’ve given, please provide some links to authoritative sources to backup and support the alternative point of view.

      • Jml

        I am we’ll educated I am not going into debt for a short period of time like I said I have been down this road and it leads to trouble

      • Jml

        There is nothing good about a credit card I have known that for years you won’t change my mind I want to know one thing how can you promote getting out of debt at the same time trying to sell a credit card contradicting beliefs here and I have never had a credit card work for me that is why I say there scum because they won’t work with you through whatever circumstances and the credit cards want everything on there terms as for me not going to do it

      • http://GetOutOfDebt.org Steve Rhode

        You have your beliefs for whatever reason. That’s fine with me.

        But as I’ve laid out with the regulations, law, and even material from the Federal Reserve Bank, when it comes to maximum transactional safety the laws and regulations behind a credit card offer greater protection than a debit card.

        I do help people to get out of debt and I do clearly educate people about the realities of the consumer protection of both credit and debit cards.

        Maybe for you a credit card is a financial death sentence but that’s not the case for everybody. In fact ignoring future credit card ownership is a detriment to having future great credit.

        You will notice that this site does not attempt to sell credit cards. I made no recommendation of any type of credit card you or anyone else should use.

        A credit card is governed by the contract the cardholder mutually agrees to and signs. The cardholder agreement the terms of the agreement and is clear what the expectations and consequences are.

        But this is just like a bank account or the debit card you may use with your bank account. Both the bank account and debit card are governed by an agreement and have consequences if things run into trouble. It would be hard to say any of the actions either a credit card issuer takes or your bank might take are a surprise.

        I think it’s clear that you had a bad experience with credit cards and that creates your reality and perception. All I’m saying is that for the general public the reality, just looking at the consumer protection facts, clearly shows something different.

      • Jml

        I think I will take advice from someone who has made there money and kept it most of the general public live pay check to pay check and staying broke because of it using credit cards to get by so I think that’s a recipe for broke desperate and stupid I will take advice from someone who has made there millions over a lifetime

      • http://GetOutOfDebt.org Steve Rhode

        That is actually an incorrect statement. The most recent data out this week showed that 44% of the population was three paychecks away from poverty.

        In fact, the higher pressure on the American household is not that someone might have a credit card, but slipping wages and increasing costs for energy and healthcare.

        You can take advice from anyone you want to. But whoever you have been taking advice from, just don’t trust them blindly. Verify the facts and make sure you are not just trusting blindly.

        And I’ve certainly known a number of millionaires that responsibly use credit cards. According to The Millionaire Next Door, of those worth millions, 59% carry a Visa credit card and 56% MasterCard credit card.

        According to the Millionaire’s Manual, “The millionaire normally does not have any credit card debt to begin with. They realize that the credit card is just a “tool from the bank.” It’s a convenient method of payment rather than an extension of credit. They know that 18-24% interest on a credit card balance is a financial killer; so they pay their bills off in full each month. And you should too!” “They are also very careful about using their debit card, ATM and online banking for payments. Identify theft is on their mind.”

      • JML

        You believe what you want about my beliefs being incorrect and I will be ahead even with rising cost of living but as for my household I will use CASH no CREDIT CARDS period

      • JML

        The more you tell me I am incorrect the more I know I am on the right path to greatness

      • Jml

        I do not borrow money anymore I do not use credit cards I am done with that end of discussion I will not use credit cards I will not have them in my house I will not borrow money CASH IS KING

  • JM

    I believe that Dave Ramsey’s main point is that if you have several thousand dollars or more in credit card debt you have proven that you are not responsible with these cards, and therefore, should not use them. If my teenager is irresponsible with a car, I take it away. Dumping credit card debt and staying away from these cards is just one of many steps in changing the way you manage your finances. As for bankruptcy, it may be someone’s only option, but without major changes in behavior, it might become an option again. I myself would not use this option unless forced to do so by legal processes as I feel a moral obligation to repay what I owe, and for the past 4 years following this plan have paid off a great deal of debt. In the process I have not used (or had) a credit card, or taken on new debt.
    We all have differences of opinion in these matters with a common goal, to become debt free. Thanks for the space to vent.

    • http://GetOutOfDebt.org Steve Rhode

      Let’s extend out the logic and see if it holds true.

      A tree falls on the car your teenager drives, through no fault of their own. Do you take the car away forever?

      You have an accident in your car where you were at fault. Do you park the car and never drive again?

      An analysis of historical bankruptcy filers shows that only 8% of chapter 7 bankruptcy filers, file again.

      So you appear to feel people should avoid bankruptcy because they might have a one in twelve chance of refiling? What about the eleven of twelve that never file again. Can’t we then assume they learned from the experience?

      As for the moral argument, please see http://getoutofdebt.org/33451/is-bankruptcy-sinful-and-bad-or-right-and-moral-an-examination

  • JML

    The only way to get out of debt is to not have credit cards one can have excellent credit without credit cards

    • JML

      Take into consideration a yearly income or off and on income through the year like I said you can believe your own facts but I have never heard of someone getting wealthy off of credit cards so in essence credit cards don’t work for me cause they come with monthly payments

      • http://GetOutOfDebt.org Steve Rhode

        I’ve never heard of someone getting wealthy off debit cards. Neither is an investment. Both are just financial transactional tools.

      • Jml

        You don’t have the fees with a debit card that you do with a credit card the better financial tool is CASH or Debit card the only financial tool I will use

      • http://GetOutOfDebt.org Steve Rhode

        Actually, you have different kinds of fees. With a credit card you have potentially late fees, overlimit fees, and interest charges if you carry a balance.

        But my advice to people in general is pay the bill in full when it arrives and never go near your limit. If you carry a balance, keep it below 30% of the limit.

        With a debit card you have a risk of fees from all the items we’ve discussed before including incorrect transactions and loss of money from your bank account due to fraud.

        While it is not directly related to the debit card you can incur bank fees if you used your debit card and did not have enough to cover transactions that later came in. How much is a returned check fee these days $35+$25 from the merchant?

        What about very expensive overdraft fees from exceeding your balance by overuse of the debit card?

        So there clearly are fees that can be caused by debit card use.

  • just_a_thought

    You stated that “But the fact is that most consumers do pay their bills on time. At the time of this article, only 2.75 percent of credit cards are delinquent. That means 97.25 percent do pay their cards on time. Certainly that’s “most families.”” I think what Dave Ramsey is saying is that you should pay the entire bill on time, each month, not make the minimum payment on time. The late vs. on time payment is not the issue, it’s the fact that if you carry a balance on a credit card, it is very costly.

    • just_a_thought

      Beyond that, this is a great article and I do recognize that you emphasize that in your article. I used to be hardcore Dave Ramsey but realized that not everyone has the ability to earn millions of dollars and it takes some of us longer than others to get out of debt. Sometimes crap happens. :)

      • just_a_thought

        *emphasize paying off credit card debt each month

    • http://GetOutOfDebt.org Steve Rhode

      Thanks for commenting.

      As I state in the article, according to recent data, 55 percent of credit card users do not carry a balance from month-to-month. And while that’s just over the 50 percent line, it would equal “most families” as well.

      I’d love to see a study on what percentage of debit card only users have high rate overdraft debt.

  • birdseed

    Thanks, Steve! Your suggestions and understanding of these debt problems are a bright light in a very dark place for many of us. These days we must look very closely at the “advice” being bounced around and educate ourselves as to the motives of some of these “advisers.” You are doing a great service!

    • http://GetOutOfDebt.org Steve Rhode

      You are welcome.

      When it comes to debt I always encourage people to do their research, think freely, become educated about these issues, and then make the choice that’s best for them.

      Dave’s supporters are very fervent but at times it seems to be too much blind faith and not enough real examination of the issues.

      • JML

        I believe you are making false statements about Dave Ramsey’s supporters on to much blind faith not enough examination of the issues how can you say something like that when they make the choice that is best for them before I knew of Dave Ramsey I was in the process of eliminating debt and getting rid of credit cards and I did close credit card accounts down and been credit card free for a year and I travel stay at nice places etc eat at nice places I don’t care how weird you think I am

      • JML

        I believe you are making false statements about Dave Ramsey’s supporters on to much blind faith not enough examination of the issues how can you say something like that when they make the choice that is best for them before I knew of Dave Ramsey I was in the process of eliminating debt and getting rid of credit cards and I did close credit card accounts down and been credit card free for a year and I travel stay at nice places etc eat at nice places I don’t care how weird you think I am

      • http://GetOutOfDebt.org Steve Rhode

        I never said you were weird.

        What I have done is corrected, with support and facts, statements you made that are not true. I don’t want future readers to get the wrong impression.

        It’s America, you are free to believe and do whatever it is you want to do, even if it’s not based in fact.

        If you are reacting to my statement that I made to someone else that “Dave’s supporters are very fervent but at times it seems to be too much blind faith and not enough real examination of the issues.” That statement was not directed at you. But if the beliefs you have stated about credit and debit cards or what type of card millionaires use comes from what Dave said, then I would encourage you to do your own independent research. And that point of view I stated is not unique. Just look at the new book out by Helaine Olen. http://getoutofdebt.org/48732/helanie-olen-talks-about-bad-advice-by-suze-orman-david-bach-and-dave-ramsey

      • JML

        You have not corrected me and my beliefs and facts are based on life experience and it is individual fault I have done my own research and I do not make a statement that is false I don’t care what is out there that says different do you just believe everything you read out there about credit and credit card companies etc

      • http://GetOutOfDebt.org Steve Rhode

        Just as a matter of interest, what bank is your debit card from. I’d be happy to review their debit card terms and conditions and see what they say.

        When you state an opinion, of course your feeling is that that statement is factual. It is factually based on your experience. But I don’t see what that has to do with federal legislation that governs these products?

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