Grant Cardone vs. Dave Ramsey: Who Is Right About Credit Card Use?
Written by
Caitlyn Moorhead
Edited by
Ashleigh Ray
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Financial advisors and experts alike have a lot of opinions on all the things that can impact your money. However, sometimes their tips and tricks conflict, which can make determining the advice that’s best for you all the more difficult.
Dave Ramsey and Grant Cardone are both well-known financial powerhouses who have very different opinions on proper credit card use. To help you figure out which advice is best for your finances, GOBankingRates took a closer look at each expert’s perspective.
Cardone’s Viewpoint: Pro Credit Usage
Grant Cardone, author of the New York Times bestseller, “The 10X Rule” and creator of the 10X Profit Planner, prefers to use credit cards, not just some of the time, but for every purchase.
His support for this idea is that using a credit card allows him to track and keep a record of every purchase, both for budgetary and tax purposes. Additionally, he appreciates the points and rewards that come with credit cards, which accumulate nicely if you make all your purchases with credit.
Lastly, he appreciates the fraud protection that comes with credit cards — if someone steals his card and charges a significant amount, he won’t be held responsible for that money; whereas if someone steals your debit card and withdraws money from your bank account, it can be challenging to recover that money.
Of course, to reap all of these benefits with none of the risks, you must be paying off your credit card each month so as not to accrue interest. Make sure you understand everything from the due date to the annual fees before taking full advantage of any credit card offers.
Strategic Credit Card Use Has Risks and Rewards
Credit cards, especially those offering cashback or rewards, can be optimized for layered benefits. You can use different cards for specific categories of expenses to maximize your rewards. For example, one card might offer substantial cashback on dining, while another focuses on travel or groceries, which can provide more favorable rewards for each expense category.
Other lesser-known benefits of credit cards include extended warranties and purchase protection. Some card issuers automatically extend the manufacturer’s warranty on items you purchase, providing an added layer of security on your investments. Talk about some good credit.
More importantly, there’s the fact that credit cards help to build a strong credit history. A well-maintained credit card account can contribute positively to your credit score, opening doors to better financial opportunities, including lower interest rates on loans better credit reporting all around.
Though Cardone’s view on leveraging credit cards for various benefits can indeed be advantageous when done responsibly, make sure you use them as a financial tool. In other words, don’t start borrowing money you can’t afford to pay interest on.
Ramsey’s Viewpoint: Limit Credit Usage
On the other side of this debate is financial expert Dave Ramsey, of Ramsey Solutions, who is always trying to help people grow wealth.
According to Ramsey, having a credit card will not make you wealthy. In fact, it can take away from your net worth due to the high interest rates they charge. He argues that the more you pay with credit, the more likely you are to find yourself in debt before long.
Instead, Ramsey recommends using a debit card because it instantly forces a limit upon what you can spend, and you won’t accrue any interest. You’re more likely to achieve wealth and other financial goals just by setting a budget, paying off debt and saving up for big purchases.
Credit Card Use vs. Your Finances
Though both money experts make good points, Ramsey is coming from a lower-risk viewpoint, as his perspective is more of a warning. There is no way around the fact that credit cards enable overspending and reckless debt accumulation when swiped from the wrong hand. This can result in a debt spiral of high interest rates that can snowball out of control.
Plus, credit cards can undermine efforts to budget strictly and save cash. Less disciplined or experienced consumers may lack the necessary self-control that makes the benefits of credit cards worth it.
So, who has the correct approach?
Final Take To GO: Meet in the Middle
“Always” and “never” types of financial advice are neither realistic nor valuable. Instead, Brandon Galici, a certified financial planner (CFP) and owner of Galici Financial, suggested asking yourself some important questions to help narrow down your achievable financial goals, including:
- On a scale of 1-10 (10 being most comfortable), how do you feel about your current debt payments?
- Do you feel confident that you will spend less money than you earn if you’re using a credit card?
- What have your experiences with a credit card been like in the past?
- What is the purpose of your credit card?
If a person has gotten into serious financial struggles with a credit card, then it is probably best for them to limit credit card use. However, each situation is unique, so these questions should serve as a guideline, not a rule.
Simply put, the optimal approach for credit card use likely combines elements of both Ramsey’s and Cardone’s philosophies. Try out a combination approach if you’re unsure where you land in this debate — use credit cards responsibly for the benefits but strictly limit usage to avoid carrying balances and high-interest debt.
Jordan Rosenfeld contributed to the reporting of this article.
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