Who makes more sense about Debit Cards...Dave Ramsey or Clark Howard?

Question

Dave says not to use credit cards but debit cards are OK. Clark calls Debit Cards "piece of junk fake Visa and fake Master cards." I think it is funny how they both seem to know a lot about finances but are polar opposites in some areas.
I tend to think it is dumb to use a debit card when you can just use a credit card and pay off the full balance each month (after all the money is obviously in your checking account anyway.)

What do you think?

Answer 1

Credit is a tool to be used properly.

Get a rewards card and pay it off in full every month. You are going to buy gas, groceries, etc, you might as well get something back for buying them. One of the best rewards cards is from National City.

Credit cards also give you things like extended warranties (I am getting an extended warranty on my new computer this way) and buyer protection.

Having a good credit rating through the proper use of credit will also save you money on insurance, because a lot, if not most insurance companies look at your credit report.

Good luck.

Answer 2

Neither of them. Most people use a debit card like a credit card, they just keep on charging and when the money runs out, the bank will sock you with overdraft fees for each charge. At $25-35 each, it costs a lot of money when people go over their limit. Credit cards are WAY better as long as you pay it off every month. About 60% of Americans do it this way. The other 40% get in debt because they have to keep up with the Joneses.

Answer 3

Dave's advice is good if you are not intelligent and can't manage debt. He seeks to protect you from yourself and the inclination to carry a balance or spend money you don't have by buying on credit.

I agree with Clark that they are fake Visa and fake Master cards. Real Visa and Master cards give you more leverage when dealing with merchants, esp. on-line Merchants if you need to dispute a transaction. They also give you things like free extended warranties and such that can be immensely useful.

My personal advice to people is to pay down every single credit card they have and cancel all of them except one. Keep the one with the lowest FIXED interest rate (lower then 9% if possible) and most benefits with no monthly fee. If your best current card doesn't meet that get rid of all of them and apply for ones on-line. By the time you've paid down all of your debt your credit score should be good and you should be able to get such a card.

I only use my credit card when purchasing on-line or purchases over $500 if made locally. I always have the money in my bank account and as soon as the item arrives and is in working order I pay the balance down to $0. This means that if I buy 10 things on-line in a month I actually send 10 payments to my credit card company. This keeps me from over spending/ thinking I have money when its actually debt, but allows me the purchase protection of credit cards.

Its also good to have a credit card for things like renting cars. Many car rental places won't take debit cards or will require a $250-$500 deposit to rent a car if you use a debit card.

Answer 4

Using a debit card is not borrowing money. A credit card is a 8, 10, 12, 18%+ LOAN. Credit cards are high interest LOANS. 80% of people DO NOT pay off credit cards each month.

Clark sounds like he is getting paid by Visa & Mastercard.

If the money is "obviously" in your checking account then use your debit card and don't worry about paying an EXTRA bill each month. What if you lost your job that month and you had to pay off the $500 visa bill? Instead pay cash (use debit card) and if you loose your job you don't have decide between paying the light bill and the visa bill.

The safest thing to use is your own saved money for purchases. Period, no debate.

Read The Millionaire Next door by Stanley; not one of those milionaire's said they made their millions by using credit cards and going in debt.

Answer 5

1. Dave is talking to people who use the credit cards to much, and a straight debit card is the way to go. A straight debit has no logo, and must have a pin # to process a transaction.

2. Clarks advice to the same people is to freeze there credit card in a block of water, in the freezer. Just a method to make you think before you use it.

3. A debit card with a mastercard, or visa logo is very, very dangerous for you. The BANKS risk nothing, you risk your money. Your account can be wiped out. This is why Clark calls these cards fake. No credit is involved, it's your money.

4. Get a straight debit card, and a straight credit card. Most banks will tell you that all debit cards now have a mastercard or visa logo. That is a lie. My bank told me this and I started to close my accounts. Guess what? I got my straight debit card.

5. Dave and Clark are great. I listened to them, and I'm now retired. :)

Donegal

Answer 6

Nonsense like "sense" are in the eye of the beholder, so nonsense makes sense and no sense at once. Is this nonsense making any sense? If so then the answer is, when ever it's coming out of me. :