Dave Ramsey is notoriously anti-debt. On several episodes of his podcast, The Ramsey Show, the financial guru has encouraged his callers to avoid nearly all forms of non-housing consumer debt, especially credit cards.
In a recent interview with political commentator Tucker Carlson, Ramsey challenged the concept of credit cards altogether.
“It’s fairly recent that it’s so pervasive, that it’s just necessary for life — and it’s not,” he told Carlson. “I don’t have credit cards, I haven’t in thirty something years.”
Carlson immediately asked Ramsey for an explanation.
“What’s wrong with having a credit card if you pay the balance every month?” he asked.
Ramsey simply replied: “Most people don’t.”
He says that 78% of consumers with credit cards don’t actually pay the balance off every month.
“Everybody talks about this theoretical discipline that they just freaking don’t have,” Ramsey said.
He claims the stat came from Federal Reserve data, but recent sources suggest the story about credit card debt is much more nuanced.
Credit cards are one of the most ubiquitous financial products in the country. According to recent data from the Federal Reserve, 82% of U.S. adults had at least one credit card in 2023.
Although the debt burden is expanding, consumers seem to have a better handle on it than Ramsey thinks.
The Fed says more than half of all credit card holders have been paying off their balances every month in recent years. Only 47% of credit card holders carried over a balance for at least one month in the 12 months leading up to the fourth quarter of 2023. In fact, this ratio has been at or below 50% since 2020, according to LendingTree’s analysis of Federal Reserve data.
Granted, Ramsey is right to be talking about debt. Households are swiping their credit cards more in recent years. Total household credit card debt has jumped from $680 billion in the third quarter of 2014 to $1.17 trillion in the same quarter of 2024, according to the Federal Reserve.
Consumerism is certainly part of the reason for this surging debt burden. However, the rising cost of living is also reflected in this growing debt pile.
Civic Science found that 25% of the Americans they surveyed in 2024 said they had to take on credit card debt to purchase gas, groceries or other essentials at least once. Of this group, 16% said they had to do so every month.
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