Personal finance commentator Dave Ramsey says that “responsible use of a credit card does not exist,” and advises consumers to cut up their credit cards. Check out his article “The Truth About Credit Card Debt,” in which he elaborates on these views, here.

In general, Dave Ramsey offers solid financial advice, but I humbly disagree with his views on credit cards. Here’s why.

Of course financially irresponsible people don’t use credit responsibly. If they did, we wouldn’t brand them financially irresponsible! I submit that credit cards, when used responsibly, have significant benefits. For instance, a number of credit cards, including the Citibank Dividend Platinum Select and the Chase Freedom card, offer 1-5% cash back on all purchases (the amount of cash back varies based on the type of purchase; I use a Dividend Platinum Select card and I’ve found that I average about 1.9% cash back across all purchase categories). Getting cash back on stuff you would have bought anyway is a smart and responsible tactic.

There’s another way that credit cards can benefit you if you use them responsibly: float. Most credit cards don’t levy finance charges as long as you pay your balance off at the end of the month. This means that, in effect, you get an interest-free loan from the date you charge the purchase to the date you pay it off. You profit from float by placing the money in an interest-bearing account until the bill comes due.

It is definitely bad to increase your spending to take advantage of cash back or float. As Dave Ramsey points out, “If you were using a credit card at 5%, you would have had to have spent $80,000 to get $4,000 rebates on new cars that lost $6,000 of value when you drove them off the lot. That is not a good deal!” I’m not sure that buying an $80,000 car is a smart financial decision under any circumstances, but if you’re going to blow $80,000, you might as well have the credit card company hand you 5% cash back on your purchase. Am I right?

Dave also advises his readers that “you do not build wealth with credit cards… When you play with a multi-billion dollar industry and you think you’re going to win at their game, you are naive. You cannot beat the credit card companies.”

The credit card companies are smart, and they are not interested in charity. They are cold and cruel and machine-like and will chew you to pieces if given the opportunity. But here’s the thing: you do have control over how you use credit cards. The credit card companies offer a set of conditions which they know will entice millions of people to overspend themselves - low intro rates which skyrocket after a few months, high penalties for late payments, absurd fees for exceeding your credit limit, etc.

The credit card companies offer temptation which it is our job as consumers to resist. We, in the end, maintain control over whether or not we make late payments, exceed our credit limits, and so on. I submit that a financially responsible person is capable of looking temptation in the face and then walking away. In my opinion, when you are able to do this, you have truly earned the title “financially responsible.”

Just so nobody misinterprets what I’ve written here, I’d like to emphasize that it is, in general, a good idea to pay off your credit card balance every month. If you are going to buy stuff you can’t afford on credit, you’re probably better off cutting up your credit cards!

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