Credit Cards

Dave Ramsey says that you should use a debit card instead of a credit card. Is right?

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Does it make sense to use a debit card instead of a credit card?

Key points

  • Debit cards and credit cards are legitimate payment methods, but they have different features and benefits.
  • Dave Ramsey suggests using a debit card instead of a credit card to avoid debt.
  • A credit card can do more than a debit card, but you have to be careful when paying it off each month.

Dave Ramsey is well known in the personal finance space. Many people look to him for guidance when he tries to get out of debt. Because Ramsey believes he should avoid debt, he doesn’t recommend using credit cards. He suggests using a debit card instead. But is he right?

Should I use a debit card or a credit card?

Credit cards are a popular payment method due to their convenience. However, if you’re not careful, it’s possible to rack up credit card debt. For this reason, Ramsey recommends avoiding them altogether.

A Facebook post by Ramsey reads: “Debt is bullshit. Cash is KING. A debit card will do everything a credit card can EXCEPT put you in debt.”

Your concerns about debt are valid. Especially given that many of his followers are likely looking to get out of debt, additional debt would worsen his personal financial situation.

But could one debit card meet all your needs? Before deciding whether to use a debit or credit card for everyday spending, you should consider the benefits of each.

The benefits of a debit card

When you pay with a debit card, the money comes directly from your checking account. Since you’re not borrowing money, you’re not racking up unpaid debt like you do when you use a credit card. You also don’t have to worry about being charged interest when you use a debit card.

Debit cards are accepted in most places. You can use them to make most purchases without having cash in your wallet. But a debit card is missing some of the features and benefits that can come with using a credit card.

What credit cards can do for you

A credit card can offer many benefits. You can use a credit card to build credit. You can also earn valuable rewards by using rewards credit cards.

Credit cards also have excellent fraud protection. Most credit card issuers offer $0 fraud liability protection. What does this mean? If an eligible credit card is used to make fraudulent purchases, you will not be financially responsible. Debit card fraud protection is more limited.

Many credit cards also include other benefits like purchase protection and extended warranty coverage. Your bank may not offer these benefits through your debit card.

One debit card may not meet all your needs

So can a debit card do everything a credit card can do except put you in debt? No. They have their differences and may not meet all your needs.

  • Credit cannot be generated with a debit card.
  • Most debit cards do not offer rewards.
  • Debit card fraud protection is more limited.
  • You probably won’t find a debit card with extra benefits.

How to use a credit card without going into debt

Are credit cards bad? Not always. You should use credit cards carefully. But there is no guarantee that you will go into debt when using a credit card.

These tips can help you avoid potential debt problems when using credit cards:

  1. Charge what you can afford to pay.
  2. Pay your entire balance in full to avoid credit card interest charges.
  3. Review your budget before using your card for a larger purchase.

Only you can decide if using a debit card or a credit card makes more sense for your financial situation.

However, don’t be afraid of credit cards and make sure you understand how credit cards and debit cards are different. You can use debit cards for everyday purchases, but you won’t get the same benefits that credit cards offer.

If you want to learn more about your credit card options, check out our list of the best credit cards.

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