What Dave Ramsey Gets Wrong About Credit Cards and Travel Rewards

For many people, Dave Ramsey & Financial Peace University have become household names for personal finances. There are many incredible results that Ramsey Solutions has helped people achieve with becoming debt-free, getting their finances under control, and building their finances on wise principles.

Unfortunately, one of the things that Dave Ramsey is most famous for is his intense rejection of all credit cards. His class curriculum infamously creates a moment where everyone brings in and cuts up all their credit cards, and agrees to only use a cash envelope system or a debit card for all future purchases.

If you subscribe to that system and advice, there's an opportunity cost: You're literally walking away from thousands of dollars in free travel!

Dave's Blanket Advice Doesn't Fit Everyone 

To be clear, some people do use their credit cards recklessly and bury themselves in consumer debt. In that case, I would agree with Dave Ramsey... Cut up your credit cards, get your spending under control, and pay off all your debt. The problem is that there can easily and quickly be an overcorrection that reality. Dave's one-size-fits-all stance ignores the nuance between those struggling with debt and those capable of using credit wisely, responsibly, and strategically.

Dave's Either/Or Thinking Misses Everyone in the Middle

For Dave, there seems to be a clear paradigm: You can either use credit cards and drown in debt or you can cut up your credit cards and responsibly build wealth. This paradigm actually breaks down when you realize that the majority of credit card holders in the U.S. actually pay their balance in full, don't carry a balance, and never pay interest. So between the extremes of materialism driving consumer debt and minimalism rejecting all credit cards, there is space for anyone who can responsibly use a credit card with discipline and strategy.

Dave's Missing the Value of Credit Card Points & Miles

When arguing against credit card points and miles, Dave wrongly makes the case that while you earn points or miles per dollar spent, the redemption value is often close to one penny per point/mile, meaning you have to spend a lot to get a small reward. That might be true for some people, but not for Travel Hackers! I recently booked a flight to Europe in lay-flat business class seats. The two seats would've cost $8,100, but rather than paying money we got them for 110,000 points! That's an incredible value of almost 8¢ per points! 

You Can Win Financially AND Travel For Free

Although we would disagree on the use of credit cards, I'm actually grateful for the ways Dave Ramsey has helped family and friends that I know get out of debt, get a handle on their finances, and begin a healthy financial trajectory. He & I would agree that financial literacy and responsibility are vitally important. 

Travel Hacking isn't about spending more or spending money you don't have, it's about leveraging your everyday expenses and making your money work for you. Every time you make everyday purchases (Gas, Groceries, Dining, etc) or pay your bills (Utilities, Cell Phone, Medical Bills, etc), you have a choice... Are you going to pay with cash, check, debit, or a credit card? If you just start paying for those every day expenses with a travel credit card, you can earn thousands of dollars in free travel. 

In addition to teaching you all the secrets of free travel in my Becoming a Travel Hacker Course, I also teach financial literacy and responsibility to ensure that you're setup to enjoy the freedom of free travel without paying interest or accumulating debt. In my course, you will go from feeling discouraged with your inability to afford travel to feeling empowered and equipped to take dream vacations for free using points and miles. I'd love to have you join me on this journey!