Finance experts have a lot of advice, and sometimes their advice conflicts with one another. Determining which advice is best for you isn’t cut and dry because finances are as individual as you are.
Dave Ramsey and Grant Cardone are both well-known money experts who have very different opinions on proper credit card use. GOBankingRates reached out to our finance experts to find out who’s right.
Cardone’s Viewpoint: Pro Credit Usage
Grant Cardone, author of “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 purposes, and for tax purposes.
Additionally, he likes the points and rewards that come with credit card usage, which accumulate nicely if you’re making all your purchases with credit.
Lastly, he likes the fraud protection that comes with credit cards — if someone steals his card and charges up a mint, he won’t be on the hook for that money; whereas if someone steals your debit card and takes money from your bank, it can be hard to get that money recouped.
Of course, in order 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.
Strategic Credit Card Use Allows Financial Optimization
John Browning, managing director and CEO at Interlink Capital Strategies, said that Cardone’s view on leveraging credit cards for various benefits can indeed be advantageous, “provided it’s done responsibly and with a clear strategy.”
Browning recommends harnessing credit cards as “powerful financial tools rather than simple payment methods.”
Credit cards, especially those offering cashback or rewards, can be optimized for layered benefits, Browning explained.
“Use different cards for specific categories of expenses to maximize your rewards,” Browning said. “For instance, one card might offer substantial cashback on dining, while another focuses on travel or groceries. This strategy allows you to benefit from the most favorable rewards for each expense category.”
Extended Warranties and Purchase Protection
Other lesser-known benefits of credit cards include extended warranties and purchase protection, Browning added. “Some cards automatically extend the manufacturer’s warranty on items you purchase, providing an added layer of security on your investments.”
Building Credit History
And, of course, Browning reminded, there’s the fact that credit cards help to build a strong credit history.
He said, “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 and favorable terms.”
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.
Having a credit card will not make you wealthy, Ramsey said, and in fact, can take away from your net worth due to the high interest rates they charge. The more you pay with credit, the more likely you are to find yourself in debt before long, he argues.
He recommends using a debit card instead, because it instantly forces a limit upon what you can spend and you won’t accrue any interest.
He said 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 Cards Can Lead to Negative Financial Effects
Andrew A. Lokenauth, financial planner, advisor and owner of the financial website Be Fluent in Finance said he can see how both men make good points, however, he understands where Ramsey is coming from in warning people off of credit cards.
“Credit cards enable overspending and reckless debt accumulation,” Lokenauth said. “High interest rates can snowball balances 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?
Meet in the Middle
Brandon Galici, a certified financial planner and owner of Galici Financial suggested that “always” and “never” types of financial advice are neither realistic nor valuable. Instead, he asks his clients important questions that help narrow down their 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?
- If a person has gotten into serious financial struggles with a credit card, then it probably is best for them to limit credit card use.
- What is the purpose of your credit card?
“While each situation is unique, these questions should guide someone in the right direction so that they can make the best decision for themselves,” Galici said.
Lokenauth agreed, suggesting that “The optimal approach likely combines elements of both philosophies.”
Try out his approach if you’re unsure where you land in this debate — use credit cards responsibly for the benefits but avoid carrying balances and high-interest debt.
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