Used properly CCs are a tool, not a crutch. You can pay the balance off on them online every week if you want… utilizing them much like a DC, but with the extra layer of protection, plus perqs, like cash-back points programs. Its not high finance, by any means, but when my savings account is paying .75% per yr & a CD is at about 1.5%, I’d say getting between 1.0 & 5.0% back in cash, simply by running my expenses through a CC, is an excellent use of CC as a tool.

OBVIOUSLY, never put more on the CC than is ALREADY in the checking account, BUDGETED for spending!

Thanks

Every day or so, I update all of my credit card balances in Quicken, and mark that amount as a future debit from my checking account. Then I pay the monthly credit card bill in full when the bill arrives. I will take anyday as opposed to having every charge hit my checking card via a debit card.

Many people are not disciplined enough to use credit card effectively, so I assume the Ramsey method is best for them.

As for the others, I thought her arguments about debit vs. credit were plenty compelling. I almost never use my debit card and I use my credit cards for 95% of my purchases. I pay them off every month and accrue rewards in cash back and points. I can go all cash just fine, but why would I do that if I can get cash back from my credit card without even having to pay a yearly fee?

As for the protection it offers – heck yes. It is absolutely convincing to me that if I need to fight a fraudulant charge on a dc I am already out that money whereas I still maintain payment control with a cc. In fact, one of my credit card numbers was recently stolen, a physical card was manufactured and then used in South Africa. My cc company caught it, removed the charge and issued me another card with a new number. If that had happened with my debit card, I’d be out over $500 (plus interest that I would have accrued had it stayed in my account) until this whole thing was resolved.

And if you’re someone with a small bank balance, a $100 hold on your debit card for a hotel room (that sometimes takes 48-72 hours to clear) can make a big difference in your purchasing power. Shoot, the gas pumps check your card to see if you have at least $75 free to pump (as of 14 yrs ago when I worked at a gas station) – if you’re on the raggedy edge already you may not have money clear for that on a debit card. I don’t, but some people may keep their checking account artificially low because they want to keep the bulk of their cash in higher interest accounts.

Basically, I agree with the author that credit cards can be a useful tool if you are responsible with your money and pay your balance every month.

Dave’s plan will work if people follow it. But other plans can also work.