Is Dave Ramsey wrong about credit cards

Do people tend to spend less money than credit cards?

Others have commented on the various studies. If, as JoeTaxpayer says, that one particular study he mentions doesn't really exist, there are plenty of others. (And in this case, did someone blatantly lie to prove a wrong point? Or did someone just get the name of the organization that got the study wrong, like it was really someone called "B&D", they got it read as "D&B" because you had heard of Dun & Bradstreet but not what B&D is. If you got the organization wrong, you may have misunderstood important details of the study. Whatever. )

But let me add a logical point that I consider irrefutable: if you always buy with cash, there is no way you can spend more than you have. If you run out of money, you have no choice but to stop spending. However, when you buy with a credit card, you can easily spend more than you have in the bank to pay for. Even if it is true that most credit card users are responsible, there will always be some who don't, and credit cards make it easy to get into trouble.

I speak from experience. I once learned that my wife was running $ 20,000 in credit card debt without my knowledge. When she divorced me, I got stuck on credit card debt. To this day I have no idea what she spent the money on. And I've known several people over the years who have gone bankrupt with credit card debt.

Even if you are responsible for it, credit cards can make it easy to lose track of them. Using cash and taking out your wallet to buy something is a quick way to tell if there is a lot of money left or not. With credit, you can forget you made the big purchase. More likely, you can't add up the modest purchases. It's easy to say, "Oh, that's only $ 100, I can cover that." But then there's $ 100 here and $ 100 there and it can add up. (Or, depending on your income level, it might be $ 10 here and $ 10 there and it's out of control, or maybe it's $ 10,000.) It's easier today when you can go online and check the balance on your credit card. But even then, when I got an invoice just last month, I was surprised at how big it was. I looked through the items and they were all legitimate, they just ... added up. Don't cry for me, I could afford it. But I wasn't paying attention to what I was spending and I was letting things get a little out of control. I'm a pretty responsible person and I don't do this often. I can easily imagine someone paying less attention and getting into serious trouble.

Jared Smith

"When you run out of money, you have no choice but to stop spending" is a store-only policy. The next stop is to get your friends / relatives / acquaintances for a loan. This was what overspending did before credit cards became commonplace and what people with bad credit are still doing today. "I would like to pay you Tuesday for a hamburger today"

Jerry Nixon - MSFT

If you always buy with cash, there is no way you can spend more than you have.


@JaredSmith I think it's worth noting that getting in touch with your friends / relatives / acquaintances takes more effort. The infamous overspending might not be affected, but those in the middle of the bell curve would certainly be aware of this.

Jared Smith