Why Can't I Use Credit Cards If I Pay Them Off Every Month

3k a month on groceries, diapers, gas, parking, household items (stuff I'd buy with a debit card regardless) I pay in full EVERY month and pay $0.00 interest and $0.00 annual fee. I get 2% cash back. Dave is TOTALLY WRONG about this one, and calling people stupid because of it shows he's been too rich for too long and no longer can relate to everyday Americans.

Yeah...I respect what he said. Yes, it's not a wealth builder. Still, doing that doesn't hurt, it's just most likely to, given that at some point a person is likely to not pay the entire balance...And, you're not playing the arcade games for the prize. It's for fun & the ticket cash in value is incidental, so it's not the same situation. Although the analogy is comparable.

Who am i to disagree, but i do. I have 1 card and it pays for all my plumbing and heating materials and then i pay if off every month. I have to spend this anyways. Why not put something in the middle of that transaction

I get 3.5 percent, we pay it off every month, were spending spending money we would have written a check for anyway, we get 400-600 a year of gift cards.

One issue with your condescending stance is that the price of these cashback rewards programs is already built into merchant fees and passed on to the prices you pay as a consumer. As you say, Dave, the companies have put a lot of thought into this and have a lot of market control. By not getting and optimizing cashback, you are leaving money on the table because you do not have a CHOICE to not engage. Unless by chance you’re dealing with a merchant who offers a cash discount, you are playing their game whether you want to or not. And what do we see? Movement in the exact opposite direction: more and more cash-free businesses.

The best option is to use a no-fee, cash back credit card on which you never carry a balance. Yes, that means that incremental growth in your net worth is being funded by some other sucker going into debt, something that you should be very familiar to you given your line of work, I might add. But until there’s an entire revamp of our financial system, that’s how it is. Our entire economy is based on credit. The way things work right now, cash is NOT “king” because our economy is stimulated by small amounts of inflation, meaning the spending power of your dollar will decrease over time if you don’t do something with it. The Fed intentionally does this for economic health, so that people don’t hoard cash, which would slow down not only unnecessary consumer spending like you take issue with, but all economic development.

Finally, great straw man. A resounding no one said that you can build millions using cash back alone. That isn’t the standard. So your attitude to your caller is unbecoming. Yet, using credit as a tool month to month and using credit cards in the way the credit companies hope you don’t has value, even for people who are already in debt. Is it better to use cash back instead of points, putting that money toward debt payments instead of to buy flights? Sure, I’ll buy that. But stop conflating points systems and cash back in Gish galloping nonsense. (And, frankly, the idea that someone can’t take a single vacation or do anything but work work work because they are in debt, even if they have budgeted for it, is the kind of zero-sum horse caca that drives people away from the road to financial independence.)

Daves got two things going for him here.
1- You do spend more with plastic. Debit or credit, doesn't matter. It's human nature to sometimes spend more paying with a card.
2- Most of his clients have credit card debt. Not one of them ever thought they'd have credit card debt when they first got a card. No alcoholic thought they'd become an alcoholic when they took their first drink. It's no wonder he's against cards. Your dentist is probably against candy too because most of his clients got cavities from candy. Sure, some people might be ok with cards and some people might not get cavities from eating candy, but the majority aren't and therefore they have to be against it because of their experience with the clients.

Wow 8 minutes of not answering the question

I use only a single credit card instead of a debit card and keep it paid off. Why? To transfer all liability and hassle to the credit card company should that debit card be compromised using it at the grocery store, Target, Home Depot, and all the other places that have been compromised in the past. If you have basic information such as the number, expiry date and the 3 digit code on back, fake cards can be written to and ran as credit and there's nothing you can do but watch the charges drain your CASH over the course of a few days. Then go get a police report, visit your bank and give them the report, then wait 2 to 3 weeks for them to replace your stolen CASH. If it was a credit card, you 'd still have your money and nothing to worry about.

That happened to me once and it really sucked, so screw using debit cards. Dave is absolutely wrong on this one.

People who carry balances should NOT use credit cards. However, those who are disciplined, those who are smart, those who are good credit card people can and absolutely should use credit cards to their advantage. It's literally free money as long as you use it wisely

This is has nuance. Dave knows that, he's smart. However, the slippery slope argument doesn't work here. In fact, it would be against Dave's teachings if someone were to not accept (as little as $20) from a big credit card company. If you take into account you could give this money to a non-profit then it's actually sacrilegious.

This is stupid. If you are spending the money anyway and not paying credit card fees (no membership fee and paying it off every month) then you come out ahead. I have a mid 7 figure net worth and I’ve been using credit cards since I was 18. I’ve never once carried a balance and I never pay membership fees (no card I have to pay to have). I avoid using a card if there is an additional fee where the vendor passes the 3% on to the consumer. The credit card companies make $$ b/c they take 3% of the transaction but they take that from the vendor not the customer — they also make money by charging you interest if you don’t pay it off every month but if you don’t do that then it costs you NOTHING to have and use the card. So I’ve had credit cards for 30 years and I’ve never paid them a dime of my own money. They’ve taken 3% from lots of vendors that I’ve done business with but that’s not my money. So Dave — if you spend $10k THAT YOU WERE GOING TO SPEND ANYWAY (gasoline, groceries, car repairs, utilities, haircuts, etc) and get $200 back that you wouldn’t have gotten spending cash or your no reward debit card then you can use that $200 to pay down your other debt. And oh yeah — I’ve flown to lots of nice places on miles and stayed in some nice hotels for free on hotel points. Agree you shouldn’t go if you are in debt but then take the Cash back. I’m sorry but this is idiotic. Let’s take an example. My 6 year old car battery just died . $280. I don’t have a choice I have to go to work so it’s money I have to spend. So I can pay $280 cash/debit or I can use my credit card. Guess what it costs me THE EXACT SAME AMOUNT. I get my statement and pay the balance in full. I’m out $280 but I get $4.20 I can use as credit against my next statement (1.5% cash back). I won. So did credit card company b/c they charged 3%. Now they REALLY make money if I carry a balance but I NEVER HAVE in 30 years. If you are smart credit cards are a tool. Sorry this is horrible advice

Dave be old AF😂

Always carry lots of CASH, especially when traveling!

Its not "$10,000 to make $200". Its not like a coupon fallacy. It is spending $10,000 that you were already going to spend (gas and groceries etc) and getting $200 on top of it. If I used my debit card to spend the same $10,000 that I would have spent, the same thing happens, only I don't get the $200. I love the Ramsey team but sometimes I feel like they are trying to gaslight us on this issue. The amount of verbal acrobatics that often go into answering this question is off putting. I redeem hundreds of dollars in points every year which I roll back onto the card. This amounts to a x% discount on everything I purchase. And I don't even have to think about it. No extra work or mental energy is put into it. Dave says it is arrogant to think this works. I think it is arrogant to make fun of people who could use the extra 2% back on $10,000. Also...um...it works. I have watched this show for years and have yet to hear a convincing argument to the contrary.

I had no credit, and got a secured Credit Card and paid it off at the end of each month. I went from having no credit, to having a 805 credit score. It was a method for me to get a credit score.

Notice how he didn't say "we asked 10000 millionaires and not one of them used a credit card". Because they do. It would be arrogant to claim otherwise. Credit card companies actually don't make money off people that pay them off every month. Internally they call these responsible people "deadbeats". What they love is people who have 0 discipline believing that they can get free stuff by spending more, and racking up tons of credit card debt. I must pay my auto insurance anyway. I'm not trying to "get rich" or "build wealth", I'm just getting free lunch money for something I have to pay for whether it's credit or debit.

If you don’t play the system, you don’t have a FICO score

Dave getting crotchety in his old age.

I absolutely... unequivocally... disagree with you. I don't use a rewards card to get rich. That isn't the point. Your missing the point.

I am going to spend money. Period. Utilities. A trip I have planned. Whatever it is. I also travel a lot. It's extremely valuable to me so as part of my budget. I Budget that in. It's an expense I will not give up. I do not change my habits because of the card. Absolutely not. I have two rules. The card is always paid off. And I never think of it as credit. The card is effectively (not really) tied directly to my bank account. You can try to argue against me on these points but your absolutely wrong. If I break any of these rules. The card gets destroyed. That's the rules. I do not bend them. If i do. I destroy the card. I think.. I have x dollars in the bank, do I want to spend it? I don't think... well I've got the card.... I have automatic payments and stuff setup. It costs me litterly seconds of extra time each month to verify transactions will happen when they should. And mine has no anual fee.

I do agree 2% isn't a lot. But.. it does pay off a significant chunk of the travel I do. It reduces my overall costs immediately by two percent. Meaning effectively 2% of everything i would have spent anyways every month instead... stays in my investments for the rest of my life. So your $20 sits for decades at 8%. It also allows me to defer all of my costs by one month. Allowing my money to stay in the bank longer before spent. Or an investment longer. This is money I'm spending regardless if I have the card or not. Every purchase I make I consider how can I leverage my system to absorb some of the cost. So I can put more into my portfolio.

I recently had to purchase an hvac system. By creatively using my card with a no interest loan. When everything is said and done. The hvac system pretty much costs me nothing. Litterly nothing. I ran dozens if scenarios. From paying cash and investing what my payments are. Paying the bare minimum. The strategy I'm taking puts my portfolio is the best position. And it's by a substantial amount. I will have thousands more invested. This isn't the first time I've done this. In the end, I go back and run the numbers and replay different strategies against what actually happened. Every time I've been right.

All these steps translate to 100s of thousands of dollars in my retirement. Which... I get probably sounds like a pizza order to you. But to me. It's years of planned experiences in my retirement.

I'm not in no way saying everyone should do this. I'm not doing it to get rich. I'm doing it because it allows me to invest more faster. And absorb painful hits like an emergency repair and smooth it out so my portfolio doesn't take hard hits. And a thing ive learned about investing. Is you have to look at the realized portfolio balances at key periods. Like the end and start of a process likd my hvac system. One of the options for paying off my HVAC system by far amounts allows me to earn more interest. However it is not the approach that gives me the highest portfolio in the end. Meaning you can't just look at interest earned during a period and measure that as good performance. You have to look at total portfolio value.

I can see why Dave is vehemently opposed to this idea; his entire program has always been targeted towards people who cannot achieve financial well-being because of mismanaging debt. The last thing he would want to tell people is that it’s okay to use credit cards in this manner because that would probably lead to less people finding success in his program. However, I think that if someone outside the scope of this very particular market were to talk with a financial advisor, they would likely learn a different lesson on how to wisely utilize credit rather than avoid it like the plague.

I do bank bonuses and credit card bonuses. Credit card: Spend $1,000 get a $200 bonus, I pay my EXPENSES ahead, Dave! By doing so I am paid $200 bonus. I am not stupid and I have no debt and never would need your baby step program. Don't treat all of us like your the smartest guy in the room and do not talk down to people.

I find it hard to believe that Mr Ramsey does not use credit cards. Debit cards can be dangerous and purchases are not protected by the CC company. You could pay for your airline ticket with cash of you don't mind Homeland Security checking you out.... drug mules do that stuff. The world revolves around credit cards and internet access. It makes me sick that every commercial says to get more info online. What about all the people who don't have the net? or credit cards. Oh, there are too few of them to worry about.

These 2 are similar to dumb and dumber when it comes to the topic of credit cards. Not one millionaire brought up credit card points is because they are taking OUT LOANSS instead. They use debt as a tool which is similar to CC usage and paying it off. Hypocritical statements.

Dave is so wrong about this one and he's gone down a hole he can't climb out of. Using a credit card and paying it off every month is like having a 1%-5% coupon on every purchase. And who can argue with a free coupon.

It's a plan. Don't follow it, watch or listen if you don't want to.

Funny how no one comments they carry a balance. A whole bunch of liars on here.

Been using my credit card for years and i have never paid a penny in interest I just paid it off in full every month that's it...

Guess what happens when your debit card gets skimmed, hacked, or stolen? Your REAL money is gone! How fun is that bouncing a mortgage payment. Hopefully the Ramsey folks have changed their message since this video was posted. Yea, whatever on the points, people need to protect themselves. Scamming is too easy these days.

If you have the $10,000 in cash for lets say for a new Hvac and your credit card say if you spend $10,000 you will receive $200.00 that is a good deal because if they have no stipulation on paying it off within the statement closing date then thaf is a win for you...

Would you rather pay $1000 for an item or $980 for the exact same thing?

It’s not gonna make you rich, but whenever you’re chasing a half percent better interest rate on your savings account, 2% is a lot.

Can I get a copy of this "millionaire study" he's always talking about?

Getting $20 from spending $1000 with credit cards is better than getting $0 from spending $1000 in cash or debit cards

The real argument against using a credit card even if you pay off the bill every month is a question of self control. Do you spend more freely (even in the grocery story) knowing you're just going to put the card down with no immediate ramifications. Credit cards take away those inhibitions.

I use credit cards to pay for online stuff, since I hear it's more secure. But I use what I can easily pay off when it's due, I don't pay with money I don't have. And I build my credit that way

This is stupid, credit cards have much better safety against fraudulent charges and other similar issues. And the cash back adds up a ton if you use them for everyday purchases and don't hold a balance. The CC companies are making money off the Interest, they call people who don't hold a balance "freeloaders". I've racked up over 1k in cash back that i wouldn't have with debit card purchases.

This guy is a hack, worst advice ever!

lmao the credit card companies make money from merchants, and people who pay interest. I am neither. I am winning. I pay $200 a year for my credit card, and about $3000 worth of travel points and cash back. this is such horrible advice. I'm spending the money anyway, why not get cashback and free travel anyway. Also they know nothing about blackout dates lol

This is horrible advice. Credit cards are great for fraud protection. When your debit card is skimmed, its your money missing until the bank finishes investigating.

This guy just talks to hear himself. The arrogance is overwhelming. Nothing wrong with using credit cards towards utilities, groceries, and other monthly expenses for the cash back provided you always pay it off every month just as you would with cash. You are going to spend the money each month anyway. Do you give up 2% cause its only a measly 2%? What a dumb argument. Credit cards are financial tools. If you use a tool correctly, it can help you. If you abuse the tool it can hurt you.

I get points in cash that I apply to my CC bill. I buy the stuff anyway so using a CC makes sense since I pay them off every month. His advice is misleading.

I agree with most of the issues with credit cards, but only for people who has ABSOLUTELY NO CLUE about how to control their expenses. If I'm paying groceries, vacation, or something else, I'm not spending just because of the points, I'm spending because I'm going to spend for it regardless.

You guy’s didn’t actually answer the question. lol. What is wrong with using them if you pay the balance in full every month and never pay a finance charge. Or an annual fee. The money is sitting in an envelope and you pay it off each month. And you get the benefit of using a credit card. You win by manipulating the system. What does it cost you? They said they weren’t in debt, but you guy’s kept saying they were. 🤔 Anyway, you didn’t present a good argument. The one thing you could have reasonably said you didn’t say… Don’t get credit cards because they are dangerous. You could get in trouble with them.

Credit cards are just a tool. It's the person using it that's the problem. Banks and banking on most people having no self control, hence the advice, but how about we teach a man to fish instead. Let's look a little closer at the psychology behind why a person is unable to control their impulses and have enough discipline to create a budget and spend within their means, and to pay off the debt every month, so they can handle a credit card responsibly... because that same discipline will also enable them to invest and grow their money as well.

This guy is a condescending prick!

A credit card is useful to build a beacon score (credit score) over time and have a positive historic to show to the bank when you want to purchase a property by example. Of course, if you have bad habits with credit you will be tempted to use credit cards the incorrect way and accumulate interest month after month. If you are disciplined and pay the total amount used at the end of each month then it's a nice tool

Sorry dave... you are wrong on this

2% is better than nothing

This has got be the dumbest DR video ever made. You should remove it so that people don’t catch on to your stupidity.

I’m 55 years old and I’ve been using credit cards since I was in my early 20’s and I’ve NEVER paid one cent in interest on a credit card. I pay the ENTIRE balance every month. I get cash back on everything I buy and that doesn’t influence how much I spend or what I buy. I don’t even think about it. Over the years I’ve made thousands of dollars on the things I was going to buy anyway. I travel a lot for work and thousands of dollars each month goes on my card, I get reimbursed, and get free money. I would be an absolute fool to not do it.

I’ve had three loans in my life; 1) my student loan which was only $15k because I went to community college before a university, and saved for college before hand. Paid it off in 1.5 years. 2) My home loan which we paid off a 30 year mortgage in 10 years. 3) my wife’s car which we paid off in 2.5 years.

We’ve debt free for 10 years and we on the cusp of paying cash for a rental property. Just looking for the right one at the right price.

I just started watching DR videos about 2 weeks ago and recently told my wife in jest, that she married DR because I literally lived my life, and always have, as he prescribes, but the arrogance he shows in this video while calling others arrogant would be funny if it wasn’t so disgusting.

And that kid has happy memories for a lifetime off of $10. These miserable nerds are not eating dinner so they can pay off their debt and then judge everyone else. Ramsey says a lot of smart things in my opinion but see the bigger picture

Dave is a moron when it comes to this point. If you’re disciplined to only spend what you need then it’s a no brainer to use free $. They make fun of $20 free money because why? Because no one is smarter than them but we know the real story.