Credit cards can be a trap: Money expert Dave Ramsey’s best tips on cutting out cards

It might be time to cut the card.

As inflation continues to climb, credit card interest rates have also risen by an average of 22%, according to Lending Tree.

Personal finance expert Dave Ramsey of Ramsey Solutions, best-selling author of "Baby Steps Millionaire" and other books, told "Fox & Friends" on Monday that the best way around high rates and rising debt is to ditch the credit card altogether.

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"I got rid of the credit cards a long time ago and went to a debit card," he said.

Ramsey offered a few tips for living without a credit card, including learning the truth about credit scores and knowing that beating the system is possible.

Ramsey Solutions personal finance expert George Kamel chimed in, noting that it is possible to rise above the credit card numbers game.

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"You don’t have to play this game to try to get 2% back while [dealing with] 22% interest," he said. "It’s insane."

One of the main concerns consumers have about letting go of their credit cards is losing their credit score.

But Kamel said that this "precious" score is completely unnecessary.

"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 said. 

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"I even bought a house without a credit score."

Ramsey agreed that a high credit score is proof only that a consumer is good at going 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 said.

"Are you going to continue to play ‘kissy-face’ with them and then wonder why you’re broke?"

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The expert offered another tip for consumers: to have an emergency fund on hand at all times.

Ramsey Solutions found that 36% of Americans can’t cover a $400 emergency — and instead turn to their credit cards for that type of need.

"It’s a plastic crutch," Kamel said. 

"Americans are now $887 billion in credit card debt — that’s half of all the student loan debt out there."

Kamel explained that many consumers have fallen into the "trap" of using a credit card for building up points and helping their credit score.

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Yet, because of inflation, Ramsey said that consumers continue to "dive into" credit cards with these high interest rates — which is just another way that the banks "screw you," he said straightforwardly.

Ramsey announced that his team has launched its own debit card called the Gazelle, with no fees and no debt.

"No screwing you," he said. "What a neat idea!"

He added that inflation is "a little scary" for everyone, but he said it's worth remembering that "you don’t make good decisions when you’re afraid."

He also said, "Pan back from the emotion and say, ‘I’m going to make the money that I have behave,’" he said. 

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In other words, he added, "'I can’t control all this stuff coming at me, but I can control how I react to it.'"

He also said, "You don’t want to [be] paying off debt five years from now that you ran up while you were scared during Biden’s inflationary period."

Ramsey added to Fox News Digital, "Eighty percent of the banking industry’s revenue comes from interest on loans. That’s absolutely ridiculous!" 

He added, "It’s why they have the tallest buildings with the nicest lobbies in every city. Banks make their money on people like you and me falling prey to their loan and credit card offers, which is exactly why we wanted to make our own debit card that DOESN’T push debt on you." 

"Credit cards are a short-term option that only set you up to fail later down the road."

He also said, "I get it. It’s hard to make ends meet right now with out-of-control inflation, and it can be tempting to take the easy way — putting expenses on a credit card — instead of saying ‘no’ to organic milk at the grocery story."

Yet "credit cards are a short-term option that only set you up to fail later down the road," he said. "You will have to pay that back, and right now, you have to pay it back with 22% interest!"

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Said Ramsey, "That’s not good financial decision-making. Get rid of the credit cards NOW so you don’t use them in a moment of weakness."

He also said, "Making necessary sacrifices now will help you weather this storm and come out stronger on the other side."