I got robbed 3k off my debit card for concert tickets being extremely careful with it. It was a whole ordeal, missing scheduled payments while making transfers, and getting reimbursed luckily. Compare that to the no liability credit card, it can be reversed in minutes. I have the 2-5% rewards cards and never carry, but the 'free money' is not why I use it. It is purely to reduce my liability. I completely believe that credit cards will influence you to spend more and that you are one step away from disaster, the studies and stats on this are pretty clear.
Can you explain when interest starts accruing on a balance? For example, I pay off my balance every two weeks and I don't think I am paying any interest. I will also pay more than I owe so that I have a negative balance. Is this a good idea?
I only use credit card, have had fraudulent charges and it just feels far less risky when it’s on credit card and easy to fix. I only use my debit card if I need to make some kind of deposit or something at the bank, just to make sure it’s always the right account… one time they deposited into the wrong account and luckily I caught it by looking at the receipt even though it was correct on the slip… never did it manually ever again. Edit: I do 2% on all purchases… 2% off everything I purchase… with kids, this makes a huge difference.
Credit cards transfer money from customers who don’t use them to customers who do. It’s one of the many ways in which life is far more expensive when poor. -cash back rewards are paid for from the small cut of the transaction that is taken from the vendor with each credit card use -this added cost to stores is passed on to ALL customers, not just to those who pay with credit cards
If you have a well funded emergency fund, you could still be a spender and have a credit card. Makes you a bit of a saver but doesn’t mean you’re maximizing savings for retirement, HSA, etc
If you know what are doing that can pay off their credit card every month or just super rich, use credit. Poor people or no Self control, use debt card.
You're the best. I also charge all expenses I can, even taxes and. Pay them off every few days or weeks, and the balance befoe the due date. Love the rewards.
You can use credit cards as long as you pay it off that month. Advantage is you get reward points and travel points. Disadvantage if you're a compulsive buyer you might max out your cards. I am debt free.
@@RyChOr2005 For me the cash back is a bonus and not the reason to buy, but I travel constantly for work. I've spent more time dealing with stolen debit card numbers than I have with credit cards themselves. There is extra security from the credit card itself. It doesn't change the way I spend money, but for purchases I need to make anyway, a little cash back is better than none. I actually use the Apple Card and the one time it was compromised I found out that by the nature of it's design I did not need a physical card replacement to change my card number. It's now the only card I use while traveling and nearly every purchase I make as long as Mastercard is accepted. I do keep a Visa card for retailers that don't accept Mastercard.
I’ve used credit cards for 99% of my purchases since I was 20 or so. Never paid interest, never out of my means. 810+ credit score. All the cash back rewards. 😎
If feels good not paying interest on my credit card too(most of the time). In all my years of using cc's I believe i only paid about 300-400$ on interest. But I was foolishly close to my limit all the time so I could never really build my credit. Im a believer that If I dont have at least 50% of the purchase cost on hand(considering all bills are paid and money in long term savings) I cannot afford what I want.
I've been hacked 3 times, with the lastest having all my savings drained because I used a debit card at a gas station. Using a credit card, your money is not at risk for fraud.
@@johnconner8437 It took the bank 6 weeks to return my stolen money while I still had bills to pay. And I had to be proactive in disputing the faulty transactions, while with a credit card it's easier to dispute and they do most of the work.
People often seem to forget that swiping a debit card is just as emotionally painless as swiping a credit card. The whole "credit cards make you spend more" argument applies to debit cards as well. People also seem to forget that if you stick to a budget, the way you pay for stuff doesn't really matter. So you might as well get 2% back on everything.
the people who dont need to see this video are people who got their finance under control so it dont matter which for of payment they use. the people that need to see this type of vids are the people that is part of teh $1.4 trillion CC debt.
Nah. If I have 3k in my account and my insurance payment is due, I am not going to get down to the danger zone but if I know I have 3 credit cards with 10k limits and I can if needed carry the balance then I will never not be able to pay bills that require debit. It's the feeling of the remaining access to funds.
With debit cards, what worries me is that it's linked to your bank account and if it's stolen, it takes at least 2 weeks to get your money replaced from the bank.
I understand your points, but I cannot be trusted with a credit card based on my past history. When things are good, I forget to pay things off; when things are not so good, I spend too much. I am the big dumb.
The fact there are tons of people who don’t have credit cards, but are in debt with cars, homes, or other loans proves it doesn’t matter, a financially irresponsible person will always be financially irresponsible, with or without a credit card.
Nope. Using cash means I can only use up what I have in my bank account. With credit cards I can borrow up to my credit limit which is more than the average person has in his bank account
Dave Ramsey advice is for financially incompetent folks who are deep in debt. If you know you are financially responsible, then there’s nothing to worry about and a majority of Dave’s advice is pretty god awful.
This is where you're wrong. The advice that people who have credit cards spend more is true for everyone. This has been proven to be true. If you get an offer for 5% on a $2000 spend. You're going to find a way to meet that threshold and I can guarantee you more than 5% are going to be spent on items you could have done without.
@@ret4kind got proof to back up that statement? Because my American Express statements say otherwise…and again…if you spend more with a CC but still pay it off every month, why does it matter? I’ve racked up enough points on my card to travel to Japan and back home TWICE and I have never got a late fee or interest payment.
@@PrimitiveAK "if you spend more with a CC but still pay it off every month, why does it matter?" "if you spend more with a CC" "spend more with a CC" "spend more"
Yeah he also prioritizes paying tithing, withdrawing 8% annually on retirement, and constantly downplays financial struggles that young people face that his generation didn't. Bad advice and out of touch. Ramsey isn't worth listening to unless you're a massively indebted middle aged+ religious person.
One of the Ramsey points is that they believe the points are “scummy” since the reason they offer them is because someone isn’t able to pay their card and pays interest which allows you to get benefits.
I mean that same logic could apply to the high yield savings accounts they advertise. You only get the interest because someone else is paying a higher rate of interest on a loan.
That's only half true. Credit card companies make money in more ways just interest on unpaid balances. Amex, for example, makes most of their revenue from interchange fees. And besides that most credit cards are issued in partnership with banks. Banks have many revenue steams, and high interest credit card debt is only one part of that. Even if they didn't make any money from people not paying their credit card balances, they'd be paying out points on credit cards. Sure, it'd probably be at lower percentages, but the points would still be there.
It’s also scummy that companies don’t allow you to be fully vested in your 401k until you’ve worked for them for 4+ years, does that mean I should just not donate to my 401k and collect the 4% match of free money?
@@TheThreatenedSwan I disagree that it’s shorthand. It’s misdirected. It treats the symptom instead of the root of the issue. It blames the object instead of the actions taken by the individual. Would be more beneficial to fix the flawed psychology, then to limit one’s options.
The idea behind it is greed. Look up some old documentaries on credit cards and how it started and why. Banks consider people who use their credit card wisely deadbeats (actual term) and don’t like them. They prefer people who overspend and pay interests as that is what makes them billions. All the benefits are meant to lure people into the trap and sadly most people fall into and can’t get out easily.
Where I live (the Netherlands) creditcards don't give any type of rewards. The only reason I have a creditcard is for when I'm traveling outside of Europe or if I want to buy something from foreign websites.
Its probably because you have legal laws on how much interest can be collected on credit cards or the culture means everyone is educated on the ways to debts, so no one is dumb enough to buy things they can't afford on revolving accounts with 20% interest rates. The rewards are there to entice people to buy more and hopefully not pay them off to collect interest, which actually does work on many people.
@@rebeltheharem7028 we do have different rules and laws, also we do not have an american style credit score. Also a culture of not spending more money then you have, altough the younger generations are going for car loans and lease plans, i'm from the 70's we learned to save up before buying something, only a mortgage is acceptable as a debt
I am also Dutch and from the '70's. Indeed do not spend more then you earn and ask yourself the question: do I really need that (item). Most, if not all adults in our Netherlands have a debit card. Most do not even walk around with cash. Or they use their mobile phone. A credit card is good to pay the toll on the highways in Italy and France. Also in our country almost no shops accept them. Shops want to be paid by debit card because it is faster and they do not have to count the money at the end of the day ( costs time) and they can not be robbed because of having cash in the shop. Almost nobody accepts 200 or 500 € bills.
I'm from Barbados and we really only get points and rewards with the high end credit cards(gold,platinum and black cards)not everyone can afford to have those cards.with the normal credit cards,we don't even get any rewards.
@@abelfaber4457Bonus Fact: The Netherlands Banks will lend you more money than what your house is worth (great for the individual, but not so much for their economy) - RU-vid Economist “economics explained”
In my own circle of friends, the ones who get into credit card debt have much more going on in their lives that just overspending. They have health issues, self-esteem issues, employment issues, family that sucks they dry, drinking problems, partying too much, not giving a crap problem, and definitely math and not knowing any better problem.
The only correct payment method is carrying around a million dollars cash in a metal briefcase with you everywhere you go, but I don't have that kind of money, nor do I own a cool briefcase, so I just use a credit card. I pay it off weekly.
I hope u are paying the full balance 🤣🤣 like I do and I pay the full balance a day before the closing date not due date the statement closing date I hope u kno the fuckin difference 😌😌
Something overlooked is the vendor fees, credit card companies make a significant part of their profit off of charging vendors processing fees! Great video Humphrey as always!
A debit card can also be run as a credit card as long as it has a credit card company logo on it like VISA. debit cards will always be useful because you might misplace your money or get robbed if you carry cash only.
I racked up about $18K in credit card debt. First thing I did was stop using credit cards, transferred it to a 0%, and went all cash with a debit card. Down to $2500 and once that’s done will have no consumer debt at all. Will once again have control of my full income to devote to e-fund and investing.
Debit card is also good for the times when some services charge fees if you use a credit card and not a debit also to use withdraw cash at the bank or ATM (excluding using your phone app) and also some debits have rewards programs. Overall though a credit card is preferred.
Credit cards are incredibly useful because they pay you reward for spending money on it so as long as you know how to use it. Travel cards are a flex for myself personally.
I used to have 12 credit cards. Now I am down to 8. I mostly use my main 2 credit cards for gas, restaurants and groceries. I get 3-4X points back in these purchases. I pay off these purchases weekly. I also use my debit card sometimes as needed. Both have different use cases. Thanks for all the great videos you put out!
All my friends who use credit cards are broke, living paycheck to paycheck and have debt up to their eyeballs. My other friends who use debit cards own homes, have investment nest eggs and are living their best lives. Not sure if correlated to owning a credit card but I’d rather be in the latter camp.
If fraudulent activity happens on your credit card, it's the bank's money that is in jeopardy. If fraudulent activity happens on your debit card then it's your own personal money at risk. Sure, issues could be resolved with your checking account but if the balance gets drawn down it may cause other bills to bounce in the meantime.
The average annual salary in the US is 80k. If you don’t make twice that I don’t recommend using credit cards. To own a home you must make 120k to afford the average home mortgage payment. Most people do not have the disposable income to utilize the points on credit cards effectively. It’s not a control issue it’s a predation issue.
I think the real issue at hand is, people view finance as a one size fits all situation. Whether a credit card is right or a debit card, it’s up to the individual to make the best decision for themselves.
I use a single credit card for everything. Get 5% back on gas and restraunts, 3% on groceries, costco, utilities, and 1.5% on everything else. I get back roughly $2.5k each year.
As a foreigner living in Japan, getting a CC here is ridiculously hard. Luckily, Japanese debit cards give points, which can be converted into yen. Also, there are no minimum balances required in Japanese bank accounts.
I really like that he hit on the credit score, everyone I hear is always talking about rewards….if you spend over a certain amount of your limit it will lower your score, doesn’t matter if you pay on time in full. With a debit card I’ve never had a problem with getting back my money that was fraud, with a credit card I have.
Three major bank credit cards in my country just moved from a 28 day credit cycle to a 21 day credit cycle. Rumour is they would like it to go to 14 day. This negates my use for a credit card. Although I am not there preferred demographic. They like “deadbeats”. That’s what the industry calls those who pay their card off each month.
At one point, I did use debit cards but eventually I started using a credit card on larger purchases such as college tuition and paying them off before interest occurred. Now I only use credit cards all eligible purchases. Unfortunately payment such as mortgage local natural gas company bills are not able to be paid on the credit card unless you pay service fee Which is usually about 2% therefore I don’t make payments through my credit card on those bills.
If you are impulsive -- and paying with plastic is too easy for you -- then a debit card is much worse than a credit card. You're likely to run out of money before you run out of month. Then you'll have to borrow (possibly on a credit card) to pay everyday expenses.
CC is my preferred method of payment also my default. I’ve been doing so since I was 18 in college and got my first credit card. I have always paid off my account balance at the end of each billing cycle, no fees at all. I now have maybe six credit cards, but only actively use three for different things. One is for my main purchases and the others are for stuff I need on the side. I have all of them on auto payments coming from my checking, so the only thing I really need to manage is to have enough money in my checking to pay for everything. And the rewards that come with each card is just icing on the cake.
I started my credit journey at 17. Paid thousands in interest due to reckless spending in my early 20s but at least I learned. I'm 31 now with a mortgage and an 820 fico. It's all about discipline!
Credit Card for most purchases, Debit card for pulling cash from the ATM, and cash for local businesses that benefit from not getting hit by large transaction fees. As one major example, my barber charges 30% less when I pay with cash instead of a debit or credit card.
My wife and I only use credit cards, and she has set our cards to use as to which category will give us back the most cash back rewards. We do not use any credit cards that charge an annual fee. We also pay-off any balance that we incur, regardless of the amount when it is due and sometimes before it is due. We do not make any minimum payments thus no finance charges or late fees. Therefore, we consider ourselves a credit card’s worst nightmare. I’ve also noticed that when I’m in line to pay for a purchase that some people who use their debit cards don’t ask or wait for a receipt. I wonder how they keep their books in proper order. I also wonder how many of debit card users have either poor or no credit.
I use a Debit Card. I hate Credit Cards(CC); you pay twice, once when you make the purchase itself and then again when the CC statement arrives. The banks really want you to use CC making it easy to use while making large purchases with Debit Cards harder all so you can end up making interest payments. The bank likes to use fraud protection as an excuse but the fact is your Debit card offers nearly as much fraud protection as the Credit Card. Contrary to the comercials on TV, CC companies are not always that eager to refund you your money when you've been a victim of fraud.
I use credit cards at every opportunity to charge. I receive 2% cash back as incentive. My typical charges total $3000 a month or $36,000 annually. This provides around $700 cash back a year. It pays my cable bill in concept. I pay off total twice a month. That keeps me debt free. FYI, fico is 846. Ramsey is right but I have the disciple to live well below my means. Not all do,
@@GlitterSn1ffer it’s just impossible not to have late fees etc, replace with credit card, same convenience, but you keep your money till the end of the month and pay in one bulk payment, when you use debit card say pay for gas, they place a hold for $100 then charge you say for $50 so really $150 hold for $50 of gas until the hold falls off, then you end up being in the red, subject to late fees, Also if there are any fraud charges they come direct out of your account with debit card so money is essentially gone,with credit they aren’t paid so you have more time to contest and stop payment,
@@jaredgates4310 ngl that is a big amount of money, but per year, does that really account to much? Genuine question btw. I mean isn't that just two months of fixed expenses Like rent and food etc
The other advantage is security. If my credit card number is stolen. The money can be refunded nearly instantly. If my debit card is stolen it's not nearly as easy to get that money back once it's been pulled out of your account.
I used to charge everything on my elite CC to keep track of my spending via the monthly statements, and for the travel perks & cash back, etc. Now, I still have that CC, but I am back to using cash for everything. Your video about the Chinese using cash reminded me of my Chinese granny and the old world attitude, & ways & wisdom about money.
As a general rule, I agree with David in that most people should avoid credit cards. I’ve used them responsibly for years, however I have made some bad choices in the past by getting services now instead of waiting until I had the money. I’ve also had buyers remorse having used a credit card when I wouldn’t have made the purchase with cash at the time. Also, when I use the debit card I see that balance go down immediately and it causes me to be more conservative with my spending.
I work in banking and rarely use a debit card. I deal with customers who wipe out their checking and savings accounts due to fraud. They may get their money back, but have no money to pay bills till in settles. Credit cards with no annual fees, points and low rates are much better if you pay them off quickly.
This only typically applies in North America and the UK. Credit cards have no rewards in most other countries of the world. Many countries also impose legal restrictions on who is entitled to receive credit.
I don't use my debit card because of skimmers. If someone hacks your account they are taking your cash and can be a real pain and you'll be cashless. Credit cards, you have time for the credit card company to fix the problem.
I’m a boomer who doesn’t even carry a debit card unless I need cash at an ATM. The only place I use cash is our local dispensary. I have all my bills paid automatically every month and have zero debt, house has been paid off over 12 years. I have about 5 different credit cards I use to maximize cash back depending on the item.
One of the overlooked factors. Refunds and fraud. When you dispute a debit card charge - you begging the bank or business to give you back your money. With credit - you refusing to pay. I know it’s subtle. But there’s a huge difference. Banks are not incentivized to return your money.
I listen to Dave Ramsay mostly. I disagree fully with his stance on credit cards. I hate when he uses the “not one millionaire I interviewed said they did it with credit card points”. We all know that, we don’t use them to become rich on points but they are nice little discounts on a spend that we were going to make anyway. If I can choose to buy something at full price with my debit or get 5% back on a credit card, I am choosing the 5% discount every time. I have zero debt and an amazing credit score because I know how to budget and use my credit to my advantage. I create monthly budgets and I only spend what I budget on credit and pay it in full every month.
Is a moral dilemma to know that the greater the benefits for using a credit card wisely, the more it’s taking from people who can’t use it wisely. I love using credit cards, but I also treat it entirely like a debit card with automatic statement payments set up the second a new card is in my possession.
Why is it your responsibility for other people to use their finances responsibly? If they want to make horrible financial choices then that’s on them, not you.
This isn't entirely true. Everyone pays the cost of credit cards; goods/services cost more as the CC interchange fees are baked into the price. Sure, CC companies profit even more from interest payments resulting from irresponsible spending; but the cost of rewards programs is outweighed by interchange and annual fees. This is why even known deadbeats (people who never pay a dime in interest, like you and me) are still heavily targeted by CC issuers. Basically, if you lose, they win. But even if you win, they still win (just a bit less).
The only time I use my debit card is to get cash out of the ATM. Our bank actually cancelled my wife's debit card because she didn't use it for years 😆
As head of household, I pay the bills on a household of 4. Having a credit card that gives me 5% cashback on utilities that average $1000 a month total that's at least $50 a month/$600 a year is my "free" vacation every year.
I racked up $12,000 in credit card debt in my 20s, paid it off in my early 30s, and these days I still use credit cards for everything and they are set to autopay statement balance each month. Just gotta learn the lesson the hard way sometimes.
Credit cards aren't really a thing in Europe and in the rest of the world because "the rewards" are not enough to offset the risks and the complications.
Autopay for monthly bills/mortgage. Cash for a few miscellaneous purchases each week after that. Cash dispensed with an ATM only card (no debit / checkcard function active). Burned too many times with fraud on a debit card. I feel that I spend less using physical cash.
At one point I remember telling myself I’ll spend a certain amount on my card and pay it off at the end of the month. I wouldn’t even look at the balance I would spend til the card stopped working then I would pay it off. I didn’t make enough money to do this as much as I did and I fell behind on paying all of it off. Eventually I maxed it out and left it there. I found out that it really does take discipline to have credit cards.
I love your videos! I use a credit card and pay the balance off every month. 35 years ago I did not know how they worked and got into credit card debt. It has been over 25 years since I have ever carried a balance. I have a spreadsheet that I use to track my balances and determine the due date. I pay partial payments in lump sum every two weeks so I don't dread the official payment due date. While Dave Ramsey has good intentions on not using credit cards I think his followers actually pay more for insurance. I live in Southern California and things are so pricey here that I want rewards when I can get them. I do not own a debit card. I still have a ATM card to use when I need to take some cash out. It should be noted that more businesses are choosing plastic over cash because cash must be kept in a safe place and deposited into a bank (labor).
I live in a country where the only credit cards available are US dollar denominated, so I only use my credit card for purchases in US dollars to avoid currency losses on conversion. Also, we have a stamp duty of $0.25 (local currency) on each debit transaction in our bank accounts, and the banks levy another $0.30 in bank charges for each debit transaction. Hence, I use cash at all times locally. If I were to use my debit card just once every day,I would pay about $200 per year in charges. I do, of course, track every cent I spend, which allows me to see where my money is going.
I think Ramsey means well, but often his advice is just replacing ignorance with superstition. I think people do end up better off with the superstition instead of the ignorance, but it’s not factual advice
Security wise, my debit card is the most secure because it usually asks for the PIN number to make the transaction. I’ve never used it online or at a gas pump. It currently doesn’t have the tap feature but it might on my replacement card. My credit card and cash can be physically stolen and used with no problem. Of course, as long as I report the card stolen, it can be shut off and I’m not responsible for any transactions that went through.
When DR talks about not using CCs he is speaking to Americans in general… we’ve all seen the stats of how consumers in the US have record amounts of cc debt. So for most people he is right - the irresponsible should NOT be using credit cards. For responsible, financially savvy individuals, cc is the best way to earn rewards/points/etc and get bonuses with everyday purchases.
I pay off my credit card balance every two weeks and never pay interest or monthly charges. I use a debit card only to get cash from an ATM. Unfortunately I’m not as frugal as I’d like to be, but my credit/debit card behavior is consistent.
I haven't used a debit card in over 5 years. Why not earn the points on a CC and build credit? Plus you can chargeback if anything unauthorized or fishy happens. Just don't spend more than you have. It's all self control and planning ahead, and should be motivation to get better with your own personal finances. The one thing I dislike about Dave Ramsey's approach is that all of his statements are so general and blanketed, that it makes it seem like everyone should be afraid of credit and debt no matter what no matter who you are. And I feel like his entire empire is still on that fear. If you're already in a bad financial place, then he has fantastic advice to offer. But if you're not, you should be doing the opposite of everything he says.
I have a visa card that comes with my checking account. I can use this to pay in most european countries. In my home country I just use the debit card That I pay 99ct per month for. my mindset is not to spend money I don't have in the first place, so this works out great for me.
I use cash or a debit card if I have to. Credit cards have interest. I am not spending my money and paying more. In the UK after having a credit card for a while usually 6 months is that they charge interest. Even if it’s just a few £ you are paying more. In the UK you do not get the credit card bill without interest if you pay it in full. Some people forget that. Credit card companies are making money off you. In most big bills in the UK and EU you cannot pay rent or taxes on your credit cards.
Love it! I’d love to see a video more in depth of using different credit cards to pay expenses (while paying it off in full) instead of a debit card to maximize their perks. Thanks 🙏🏽
My credit card allows me to stay at big fancy hotels and resorts I could not afford on my own. I travel a lot, and between the hotel points and “free nights” they dole out every year, I save thousands. I pay my balance off the day each transaction posts, and pay strict attention to promotions in order to maximize the points I get on ordinary purchases. And most of all, I never use my credit card unless I have the cash to pay it off that very day.
I think this is the first time ever I've seen someone has said more than "you build credit score" when talking about credit cards benefits Also, I don't know if my family is just bad with credit cards, but I've always been told that buying something with a credit card is literally more expensive up front by a certain percentage, regardless of how you manage the long ther interest
This is only true for the US. As you go abroad you will notice that not all stores are accepting creditcards. In Europe there are no rewards or whatsoever tied to a creditcard.
Its just simple, dont spend money you dont have. I have been using credit cards for 6 years and the total interest i have paid till date is 11EUR. That was even a mistake because i forgot to fully pay my balance that one month.
Ever since I was able to get a credit card, I have been exclusively using them even when it was not possible to do so (like charity at church or paying rent or lending money) but I learned that credit cards are amazing if you have discipline just like a debit card. One person once told me, use credit as debit, so don’t buy what you don’t have. Which works. I have like 6 and plan to get more.
I only use credit cards. I never buy what I can't afford. Pay off the balance every month. I have a debit card that I used to use to withdraw cash, but I find that I never need cash anymore. In fact, many places don't want to take cash.
I use my credit cards like a debt card. Everyday, I update my spending transactions and transfer what I charged to a paid line in my budget. I then pay off the balance off every Friday.
I never use a debit card, unless that's my only option. I ALWAYS use credit cards because of the points. BUT that is only because I always pay off my balance every month. If you don't have that discipline, then you should only use a debit card. I started with Dave's advice, but I think he's wrong when you have a lot of money and you can pay it off.
In Canada, where, within the past few years, the payment terminal systems were fully out of commission, nationwide, for the better part of a day - *twice* in less than *six months* - the importance of financial liquidity becomes ever clear. Also, using physical currency simply help with rationalising expenses to their lowest expression, encouraging one to spend less, and save more. When it comes to most types transactions... Cash is truly king. 💵👑
