3 Reasons Dave Ramsey Is Wrong About Credit Cards

A man sitting in an armchair and typing into his laptop while holding a credit card in one hand.

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The finance guru’s credit card advice could make your life harder. 


Key points

  • Dave Ramsey has discussed credit cards extensively.
  • Ramsey suggests you can build credit without using a card and that credit card rewards aren’t worth it.
  • Ramsey isn’t completely right about credit card rewards and whether they are worth it.

Dave Ramsey is a well-known financial expert with millions of readers and listeners. Ramsey has provided advice on many different issues, but is perhaps most recognized for his anti-debt stance.

Ramsey firmly believes it’s possible to live life largely without borrowing, and he recommends steering clear of credit cards. Unfortunately, his advice on credit card use could actually end up adversely affecting your finances and most people should opt to take a different approach.  

So, why shouldn’t you listen to Ramsey about credit card use? Here are three big reasons why he’s wrong in his stance on this issue. 

1. Ramsey says there are other easy ways to build credit, but that’s not always true

One of the single biggest benefits of credit cards is that they can help you earn a good credit score. As you use your cards, you develop a positive payment history — which is the most important factor in the credit scoring formula. Maintaining a credit card for a long time and keeping the balance below 30% of the credit available to you can also help bolster your score. 

Ramsey suggests that it’s no big deal to give up these credit-building benefits because there are other ways to “prove you’re responsible with money.” He gives examples including paying your cell phone bill, utility bill, and other “regular bills” on time and he claims “the right creditor will take that into account.”

In reality, however, utility and cell phone payments are not generally reported to the three major credit bureaus and so your record of paying these bills does nothing to help you build a positive credit record or earn a good score.  

Further, while it is sometimes possible to find lenders willing to look at other financial credentials, the vast majority of loan providers and credit card issuers are going to focus on your credit score. You’ll be unnecessarily narrowing your borrowing options — and potentially making getting a loan such as a mortgage much more expensive if you listen to Ramsey’s advice. 

2. Ramsey claims credit card points aren’t worth it because of fees

Credit card rewards are another major benefit of using credit cards since you can get cash back, merchandise, or free or discounted travel just for using your card for everyday spending. These rewards can be very valuable, often adding up to hundreds or even thousands of dollars per year. 

Unfortunately, Ramsey suggests that rewards aren’t worth it because of “recurring membership fees” and “all the interest you end up paying.” The reality, however, is that it is possible to avoid interest charges entirely if you simply use your cards responsibly. And many cards charge no membership fees at all, with those that do usually providing many other valuable perks such as airline lounge access or free checked bags. 

If you are confident you can pay your cards off before your creditors start charging interest, then there’s absolutely no reason to give up on earning rewards for purchases. 

3. Ramsey also claims credit card rewards aren’t worth it because they expire

Finally, Ramsey suggests that it’s not worth earning credit card rewards because they expire. This is a strange claim because with most cards your rewards will not expire as long as the account remains open. And even if there is an expiration date, you could still benefit from earning rewards simply by redeeming them before they expire. 

For all three of these reasons, you shouldn’t heed Ramsey’s advice about steering clear of credit cards. Instead, you should use cards in a responsible way, choosing a card that provides valuable rewards, paying off the card in full each month, and making sure to avoid charging too much on the card so you can earn a good credit score.

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