4 credit card myths Dave Ramsey doesn’t want you to believe

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Dave Ramsey is clearly not a fan of credit cards. And he’s certainly not a fan of bad financial advice and misinformation. With that in mind, here are some credit card myths Ramsey is on a mission to debunk.

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1. Credit cards are good and most people pay them off every month.

If you pay off your credit cards in full each month, they won’t hurt you financially. This is a true statement. But it’s also a pretty big “if”. According to the Federal Reserve Board, only 48% of Americans pay off their credit cards in full before their bills are due. This means that more than half of Americans earn interest on their credit card charges.

2. Credit cards give you free money with no strings attached

Many credit cards offer cash back or rewards for your purchases. And that’s free money. But if you fail to pay off your balance in full each month (which as we just learned is the case for most people) then what you earn in cash back you lose in the form a much higher interest rate. on purchases you defer and repay over time.

3. Having a credit card is essential to buying a home.

You need good credit to qualify for a mortgage. But if you overuse your credit cards, your score could take a hit. And since there are other ways to measure how you pay your bills besides your credit cards, you definitely don’t need them to buy a home.

Having said that, you will need a good credit rating to qualify for a home loan. If yours needs work, you can increase it by:

  • Pay all incoming invoices on time
  • Pay off some of the credit card debt so that you use less of your total available credit
  • Be added as an authorized user to a friend or family member’s credit card that has been open for years and is in good standing
  • Correct errors on your credit report (you are entitled to one free copy from each reporting bureau each year, and currently weekly credit reports are free until April 2022)

4. You need a credit card for emergencies

Many people regularly use their credit cards when unexpected bills hit. But it also means that people regularly organize themselves to carry a balance and earn interest on it. A better bet is to have an emergency fund equal to three to six months of living expenses in savings. It is the source to which you should turn when the unexpected happens.

While Dave Ramsey may not approve of the use of credit cards, the reality is that there are are ways to use your cards responsibly and gain many benefits. If you are going to use credit cards, however, be sure to follow these key rules:

  • Always pay your bills on time
  • Never carry a balance
  • Don’t spend more to get rewards or bonuses
  • Don’t use a credit card in place of an emergency fund

If you stick to these guidelines, your credit cards could serve you well, although Ramsey would likely advise you not to open any in the first place.


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