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

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Does using a debit card instead of a credit card make sense?


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 not to pay it off every month.

Dave Ramsey is well known in the field of personal finance. Many people turn to him for advice when trying to get out of debt. Since Ramsey thinks you should avoid debt, he doesn’t recommend using credit cards. He suggests using a debit card instead. But is he right?

Should you use a debit card or a credit card?

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

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

His concerns about the debt are valid. Especially since many of his supporters are likely looking to get out of debt, further debt would worsen their personal financial situation.

But could a debit card meet all your needs? Before deciding to use a debit or credit card for your day-to-day expenses, you should consider the benefits of each.

The advantages of a debit card

When you pay with a debit card, the money comes directly from your checking account. Since you are not borrowing money, you are not running up unpaid debt like you do when using a credit card. You also don’t have to worry about interest charges when using 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 lacks some features and benefits that can come from using a credit card.

What credit cards can do for you

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

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

Many credit cards also include other benefits such as purchase protection and extended warranty coverage. Your bank probably won’t offer these benefits through your debit card.

A debit card may not meet all your needs

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

  • You cannot create credit 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 with care. But there is no guarantee that you will go into debt using a credit card.

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

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

Only you can decide whether using a debit card or a credit card is best for your financial situation.

However, don’t be afraid of credit cards and make sure you understand how credit cards and debit cards differ. 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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