Cutting the cards might be a good idea right now.
Inflation continues to soar. This also increased credit card interest rates by an average of 22%, as per Lending Tree.
Dave Ramsey, a personal finance expert at Ramsey Solution, told Fox & Friend that the best way out of high interest rates and mounting debt is to give up credit cards altogether.
“I got rid of the credit cards a long time ago and went to a debit card,” he stated.
In addition, Ramsey gave some tips for spending without a credit card. It includes shedding light on credit scores and learning that beating the system can be practical.
George Kamel, another personal finance expert, stepped in. He said it was viable to reconsider betting on credit card numbers.
“You don’t have to play this game to try to get 2% back while [dealing with] 22% interest,” he stated. “It’s insane.”
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High Credit Scores
Consumers are afraid to let go of their cards because of their high credit ratings.
However, Kamel stated that this “precious” score is entirely unimportant.
“I haven’t had a credit score in years. And I learned you can rent apartments, you can rent cars, you can rent hotels,” he stated. “I even bought a house without a credit score.”
Ramsey added that a high credit score merely proves that a consumer is good at entering into debt.
“The algorithm that FICO uses to create your credit score is 100% based on how much you play ‘kissy-face’ with the bank,” he stated. “Are you going to continue to play ‘kissy-face’ with them? And then wonder why you’re broke?”
The expert provided another piece of advise. Consumers must have an emergency fund on hand all the time. Ramsey Solutions discovered that 36% of Americans couldn’t afford a $400 emergency. And they turn to their credit cards for that time of need.
“It’s a plastic crutch,” Kamel stated. “Americans are now $887 billion in credit card debt. That’s half of all the student loan debt out there.”
Credit Cards are Loans
Moreover, Kamel elaborated that many consumers have signed up for the “trap” of utilizing a credit card to accumulate points and aid their credit scores.
But due to inflation, Ramsey stated that consumers progressively “dive into” credit cards with these high-interest rates. He noted that it is just a different way that the banks “screw you.”
According to Ramsey, his team has released its own debit card – Gazelle, with no fees and no debt.
“No screwing you,” he stated. “What a neat idea!”
Additionally, he said inflation is “a little scary” for everybody. However, it’s good to remember that “you don’t make good decisions when you’re afraid.”
He also encouraged consumers to recover from the emotion and remind themselves to save the money they have.
To put it simply, he said: “I can’t control all this stuff coming to me. But I can control how I react to it.”
In an interview with Fox News Digital, Ramsey said: “Eighty percent of the banking industry’s revenue comes from interest on loans. That’s absolutely ridiculous.”
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