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Dave Ramsey vs Kevin O’Leary | Are Credit Cards a Wealth Tool or Financial Trap? | Future of Finance
12 Plays1 day ago
Are credit cards helping build your financial future—or quietly destroying it?
In this episode of The Future of Finance, Marissa Wood and Lisa Green react to two viral financial clips from Dave Ramsey and Kevin O’Leary, who have completely opposite opinions on credit cards.
One says they’re dangerous debt traps. The other says they’re essential financial tools. So… who’s right?
💳 Learn how to use credit cards responsibly
📈 Discover when credit cards can actually benefit your finances
🚨 Understand the warning signs of dangerous debt before it spirals
Whether you love points and travel perks or you’re trying to dig yourself out of debt, this episode gives practical, real-world advice on using credit cards wisely.
💳 What You’ll Learn
- The right (and wrong) way to use credit cards
- How to avoid falling into high-interest debt traps
- Why credit scores still matter for buying a home
- Smart strategies for travel rewards and cashback
- How discipline—not the card itself—determines success
💬 Question for you:
Do you agree more with Dave Ramsey or Kevin O’Leary when it comes to credit cards?
👍 Like, subscribe, and share this episode with someone trying to improve their financial habits.
📞 Want help building a smarter financial strategy?
Schedule your free consultation: https://union-financial.com
Recommended
Transcript
Introduction to 'Future of Finance' Podcast
00:00:09
Speaker
Hi, everyone. Welcome to the Future of Finance podcast, where we break down investment strategies to help you live a better financial future. I'm your host, Marissa Wood, financial advisor and one of the owners of Union Financial Services.
Why are Credit Cards Polarizing?
00:00:22
Speaker
And today, we're diving deep into one of the most polarizing topics in personal finance, and that is credit cards. Because depending on who you ask, they're either a wealth building tool or a financial vehicle that will destroy your future. So today we're going to react to two viral investing clips from millionaires that you might recognize who have completely different advice on the use of credit cards. And to give us even more input, I'm joined by my business partner, Lisa Green.
00:00:53
Speaker
But before we get started, I'd ask that you please subscribe to our channel on whatever podcasting app you're watching this video on. It really does help us. So, Lisa, thank you for joining us again. Hello, Marissa. It's great be here. I'm intrigued to hear your perspective. As always, it's nice to have two perspectives with all of our clients. Of course. And this is a big, hot topic, isn't it? It is. You know, a lot of financial experts have said that credit card debt is an epidemic in our country. Now, Lisa, do you agree with that? What are your...
00:01:26
Speaker
like raw views on credit cards? you use them in your life? I do use credit cards. I find it i find it would be very difficult to go through this type of a world without using a credit card.
00:01:38
Speaker
But of course, there has to be discipline. Of course, there has to be some boundaries. And we're going to hear from what the experts say. And then we'll hopefully be able to give our own opinion on those specific topics for that specific type of a credit card debt or, you know good debt, bad debt. Absolutely.
Dave Ramsey's Critical View on Credit Cards
00:01:59
Speaker
So let's watch a quick clip from someone you guys might recognize named Dave Ramsey.
00:02:07
Speaker
So I saw something the other day that said, Poor people use debit cards. Rich people use credit cards. I don't have any credit cards. Should I? so here's here's the thing. People get credit cards for mainly one reason.
00:02:21
Speaker
So they can buy crap. They don't have the money to buy. Right. And then they justify it going, well I need to build my credit. That's what they say because that's what rich people do. Rich people build their credit. Whoa, crap!
00:02:36
Speaker
All the rich people that we interview say they get out of debt and stay out of debt. And that's how they got rich. They don't pay payments all the time. Because, see, there's only one way to build your credit, go in debt, right? Right.
00:02:47
Speaker
Why? So you can build your credit. Why? So I can go into debt. Why? So I can build my credit. Why? So I can go into debt. Why? So I can build my credit. It's a dog chasing its tail. It's called the great FICO scam.
00:03:02
Speaker
Okay. Interesting. That is interesting. I mean, a little bit of comedy there, of course, but, you know, it is a serious topic. And, I mean, first of all, just my raw reaction would be i don't like that they're using rich people versus poor people and debit versus credit. I i don't like that at all because I think...
00:03:23
Speaker
We all go through different phases of life where we might have abundance and we might not. And it's it's an ever-flowing evolution through all of our lives.
00:03:36
Speaker
Whether we have a credit card or a debit card to label people, I totally disagree with. I disagree with that as well. um The fact that to go into debt, well, that's not why people get credit cards. People get credit cards to buy things on credit. you know That's not their intention is to go into debt. Now, is it the credit cards company?
00:03:58
Speaker
goal to make us go into debt? I would hope not. That's how they make their profit. I'm not sure why they're charging us 25% interest when that's not anywhere near a fair interest rate. But we need credit cards.
00:04:13
Speaker
We need credit cards to to survive in our electronic world. There's a lot of places that don't even take cash. That is
Is Building Credit History Necessary?
00:04:22
Speaker
true. And I mean, we do need to build credit for large purchases such as a home. I mean, imagine 25-year-old has never had a credit card, never had a car loan or a student loan, and goes to purchase their first home.
00:04:38
Speaker
Do you think they're going to get approved for that mortgage with zero credit history? No, you you need you need to be able to show that you can pay off on a timely manner and then that builds up your credit score. You know, you need to have, whether it's a loan or whether it's credit cards or a nice combination of those, you know, car loan, credit cards, you have to be able to have that to show so that you can purchase those big ticket items. Mm-hmm. What are your thoughts on using a debit card? Because Dave Ramsey is a huge fan of the debit card. Now, I'm very surprised at that. Yeah.
00:05:17
Speaker
Recently, oh, few years ago, I shouldn't say recently, I was at the bank and ah the bank gave me a business debit card. And of course, I always have my personal debit card. The bank manager said to me, please put this debit card in your safe, in your home. Do not ever walk around with it because that if someone compromises your debit card, somebody fraud fraudulently uses your debit card, they can take your actual cash out of that bank account as opposed to having a credit card. That's the credit card's money you're using.
00:05:56
Speaker
If somebody steals your credit, your debit card, they're taking your hard earned money that is safely deposited into your bank. And it's very hard to get that money back. That's true. I guess with yeah with fraudulent charges, it's easy to dispute them with a credit card.
00:06:16
Speaker
yes And usually it is resolved. yes And you're not out any money. With a debit card, it might take a lot longer if it can ever be disputed. Right. and And putting that money back into your account is a long process. So that was a very interesting eye-opening um event for me. So I usually just keep my debit card at home.
00:06:40
Speaker
You know, what is that what is the reason that I would need to carry it around if I needed it cash? Why am I going to really need cash? yeah You know, okay, we should all have some cash in our wallets.
00:06:52
Speaker
I do. But the debit card really is for that emergency. Hey, i'm I'm going on a fishing trip and I need a few hundred dollars. Let me go let me go to a machine and get my money out. But as far as as far as debit cards as a um replacement for a credit card, the only positive to that would be that you're not charged interest.
00:07:17
Speaker
Yeah. So I think maybe it's a good stepping stone into the world of credit cards when you're when you're younger and you're just learning or having that small balance that once you hit it, you can't go over and above that. But I don't think it's a replacement for credit cards. No. And and in all reality, you should never let that debit card out of your possession. Say if you're at a restaurant and you decide you want to pay with a debit card,
00:07:43
Speaker
You do that at the table. You don't hand that over and have someone be able to take all of your information because that's where the problems can start. The exposure. The exposure. All of your information is on that debit card. And that cash is immediately available.
00:07:59
Speaker
That is a great point. You know, not all financial experts have a problem with credit
Kevin O'Leary's Credit Card Strategy
00:08:05
Speaker
cards. So I do want to watch another viral clip. And this one is from a financial expert named Kevin O'Leary. So let's see what Kevin O'Leary has to say about credit cards.
00:08:15
Speaker
I recommend that everybody have at least two credit cards. The first credit card is one that has a very low limit, let's say $2,000, and that's the number you use on all the online services.
00:08:28
Speaker
If they get hacked, nobody can spend more than $2,000. That's how you protect yourself. The other card is the one you use when you actually buy things that are not online, and perhaps those purchases can be much more expensive.
00:08:44
Speaker
I love that. That's an interesting take that I haven't heard. Well, there's one thing I don't love about it. The online purchases credit card and the in-purchases credit card. I hardly purchase anything in person anymore. Most people like you. I'm getting there. Yeah. we don't We shop in front of our computer, in front of our phone. Literally. um But the two credit cards, one with a low limit,
00:09:10
Speaker
And one with a higher limit, I think, is a great idea. I think it's brilliant. i would I would even venture, you know, if you are a big spender and can't really control yourself, put that limit at $1,000 $1,500 so that while you're shopping on Amazon, you know, let's let's limit your your purchases to to a decent amount that you can afford to pay back immediately. So we haven't even touched on that.
00:09:40
Speaker
Yeah, so, you know, we've seen the two viral clips on two different experts, two different opinions, but we meet with hundreds of clients every year and we've seen firsthand the pros and cons of using a credit card. and where that can benefit your future and where it can really set you up for
Financial Pitfalls of Credit Cards
00:10:01
Speaker
failure. um So let's talk about some of those dangers of credit card use. Knowing that we are pro credit card to a point, yeah um have you seen any experiences firsthand with clients or friends that
00:10:16
Speaker
Credit cards have put them in a bad position. Of course I have. And and being a financial advisor and having that client ah knowing that he's he's got he or she has to call us up and say, well, it happened again.
00:10:33
Speaker
And i need to take out X amount of dollars from my retirement accounts or from my investments. The worst thing we have seen multiple times is people taking out prior to 59 and a half people taking out money from their retirement.
00:10:52
Speaker
IRAs from their retirement accounts to pay off purchases that they don't even remember they did. um Maybe it was frivolous purchases. Maybe it was things that ah they thought they wanted and they never used again. um it's It's a very sad place to be because it's almost an addiction. And having us as the...
00:11:20
Speaker
guardian of their funds makes it a little less easy to just, oh, let me write out a check for $25,000. You know, to have to call your financial advisor multiple times over the course of the year or every other year when it's a big problem. I mean, these credit card debts can cause massive problems within a family.
00:11:45
Speaker
Yeah, I mean, the marital stress alone, we've seen many times that the husband or wife wants to keep it from the other spouse that they racked up $25,000 on the credit card. And, well, what account can I withdraw from where they're not a joint owner and they won't see it? I mean, that gets messy.
00:12:04
Speaker
And it's not a good position to put your family in. Especially, I have seen... um Unfortunately, a family friend of mine had lost their job last year and I was working them through how we were going to replace that income for the temporary period where they were looking for a new job. And make sure that they could continue paying their mortgage, their utilities, all of their basic living expenses, make sure their family was taken care of.
00:12:35
Speaker
But then they revealed that they had racked up a ton of credit card debt before losing their job. right And so now it was, what do we take care of first? Do we pay your mortgage first, or do we pay the minimum payments on your credit card? right And oh my gosh, now this is double the amount of stress.
00:12:56
Speaker
And it's not a good place to be in. No, it's devastating.
Advantages of Low-Limit Credit Cards
00:12:59
Speaker
And so Kevin O'Leary's theory on having a low limit credit card as your primary credit card is the way to go.
00:13:09
Speaker
You can put that other credit card with the higher limit in your home safe, you know along with the debit card, yeah in your home safe, and have that there for purchases. Maybe you need a refrigerator. Maybe you need furniture. um There are things that we know that come up that are big ticket items.
00:13:31
Speaker
But have that credit card separate for that. And when that bill comes in, do your best. Do your best to pay that balance off. 25% interest is horrendous. And that is what you'll be paying.
00:13:47
Speaker
Yeah, you're never going to average that in any kind of investment. So you'll always just be chasing. If you plan on paying that interest payment, It's a slippery slope. right Credit card companies want you to. That's how they make their money. But do not succumb to that.
00:14:05
Speaker
You should not be paying any interest on your credit card. I personally never buy anything on a credit card that I can't pay for that very day. I've actually never bought anything besides my home, even my car. um i never bought anything that I couldn't pay for that very day. And I've taken advantage of car loans and 0% 12-month financing for, let's say, some furniture and stuff, but only because I knew I could pay it that day. So I definitely will pay it within that 12-month period before the interest rate kicks in. um
00:14:43
Speaker
But that's not something that I would recommend to everyone. Because you have to be disciplined and you have to have that money set aside and earmarked. If you can have it invested, even better. Those 0% say furniture store credit cards.
00:14:59
Speaker
Tell us how they work. Yeah. So last year after i moved, i did take advantage of one of those 0% 12-month credit cards that was offered through the furniture store I was using. you know I bought my couch, that new dining room set, a couple all ah other pieces of furniture, and everything that I could afford from my checking account that very day. But I took advantage of that credit card because I knew rather than writing out you know a $6,000 check or cash that very day, i could pay it a little over the time of 12 months, and I could invest that $6,000 and earn 9% or 10% throughout the year.
00:15:42
Speaker
And then when that year ends, I will pay off everything I owe on the furniture, and I'll have a couple extra $100 that my husband and I are going to plan on going out to dinner or doing a staycation with. But, you know, we have to stress when a, just say, furniture store gives you that 12-month 0% interest on that credit card, if you go 12 months and a day past that time frame,
00:16:11
Speaker
you will be paying back interest for that entire year on your entire purchase. And it's going to be 20% to 30%. Yes, be very careful. When they say 12 months at 0%, they mean that.
00:16:26
Speaker
and And a lot of people don't read that fine print. Very important. You better mark down that day, put a million reminders for 11 months. zero the month And make sure you have that money set aside, invested or in your high yield savings account before buying anything. Yes. Yeah. So, I mean.
00:16:47
Speaker
There are some good uses, though, for credit cards that we've seen personally and with clients.
Perks of Credit Cards: Are They Worth It?
00:16:53
Speaker
um Can you tell us any of your positive use stories? So we have a wonderful friend and client, and he has one of the hotel credit cards.
00:17:05
Speaker
Now, he uses that credit card for so many purchases that what happens is he racks up such privileges with that credit card, such as when he goes to a hotel, he'll have maybe a couple free nights. He'll have early check-in.
00:17:22
Speaker
late checkout. He'll have things like room upgrade. This is all from using a specific hotel chain's credit card. He gets perks that none of us could get. You you wouldn't want to pay. Okay, let me pay for a suite as opposed to a single room. He gets that for free just by using that company's credit card. He was going to use a credit card anyway. Why not use one that gives you advantages? And I know you and i use airline credit cards all the time.
00:17:54
Speaker
Yeah. Most of our flights we do not pay for. And we travel a lot for work, for pleasure. And just by using credit cards that give you mileage for every dollar you spend, you know where you're going to spend that money anyways on home purchases and groceries and whatnot. Yeah. If you can travel for free and get your checked luggage for free and maybe access to the airport lounge, right all those things that make travel more fun, why not?
00:18:23
Speaker
I know. I've heard of people that put their children's college tuition on a credit card in order to get those perks on that specific card, and then they do pay it off. But it's pretty smart if you use them wisely. You can take advantage of all of these privileges that credit card companies, you know, we're so we're talking about, oh, they're high interest rates and it's so bad, but they also have perks and advantages that you should take advantage of. Yeah, I mean, definitely look into the different types of credit cards. Of course, we're we're only recommending you have two, no more than two. Don't have a bunch. It's too hard to keep track of. um
00:19:04
Speaker
But look in to see what would be the most beneficial in your lifestyle, if it's hotels, if it's... Mileage. Cashback. Another is cashback. Yeah. My husband and I have a cashback credit card that we use for household supplies and groceries. Right.
00:19:22
Speaker
we're We're going to Publix anyways. And what ends up happening is every month or two, we have a nice amount of cashback that we can use to go out to dinner together. Right. Totally free. Yeah. Yeah. So in closing, i think that most people don't have a credit card problem.
00:19:39
Speaker
It's a discipline problem. Right? Right. I agree. yeah And I think even just having an advisor might help you be more disciplined and think twice before making each purchase. Because if you know in the back of your mind, you're going to have to call up your financial advisor and justify it and ask for a withdrawal,
00:19:58
Speaker
you might not make that purchase. It's true. It's true. And and and we have guided a lot of clients through that withdrawal of using all those credit cards. You know, some people think, oh, if I have 10 credit cards and I have $1,000 that one, $500 on this one, you know, it's kind of spread out. Well, that's a tough place to be in when you need to consolidate your bills. I mean, you need to really use, too, like you said. Mm-hmm. Yeah, and think twice before you make those purchases. Sure. Set a budget.
00:20:28
Speaker
Have an emergency savings plan of at least three to six months worth of your expenses so that you don't have to withdraw from investments to pay off your credit card. um And yeah, just discipline and accountability. I think if you have those two things and an advisor in your corner, credit cards are not bad.
00:20:48
Speaker
um So final takeaway, if you have credit cards and you're using credit cards, here's the rule.
How to Avoid Credit Card Debt Accumulation
00:20:54
Speaker
Pay them off in full at the end of every month. No exceptions.
00:20:59
Speaker
If you can't do that, don't use them. That's great advice. Now, if you have specific questions regarding credit cards, debt, your investments, or you just want to have a conversation with Lisa and I, we always offer complimentary consultations by phone, Zoom call, or in person.
How to Schedule a Consultation
00:21:16
Speaker
All you have to do is go to our website, union-financial.com, and click schedule a meeting. It'll take you right to our calendar where you can book a time that works for you.
00:21:25
Speaker
Lisa, thank you again for coming Thank so much. That was good information. i like that. you You always have so much knowledge to share. i've been around a long time. And thank you everyone for tuning in to another episode of the Future of Finance podcast. I'm your host, Marissa Wood. we look forward to helping you live a better financial future.
00:21:46
Speaker
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