Is Dave Ramsey right about credit cards?

This post comes from partner blog The Dough Roller.

According to Dave Ramsey, and I quote, "Responsible use of a credit card does not exist." He then goes on to add that there "is NO positive side to credit card use." These quotes come from Dave's website in an article entitled, "The truth about credit card debt."

When I hear this extreme view, my mind immediately recalls saving thousands of dollars and getting out of debt faster with credit cards that offer balance transfers. I also remember all of the vacations we've taken for free or for substantially less than full price because of travel reward credit cards -- Guatemala, London, Detroit (don't ask).

So I decided to dig deeper into Dave Ramsey's view on credit cards. What I found shocked me. He certainly has a few reasonable arguments against the use of credit cards. But his extreme view that it is impossible to use credit cards responsibly is based on arguments that are frankly irrational and paranoid. So let's take a look at why Dave Ramsey thinks credit cards are evil.

You spend more with plastic than cash. Dave's main beef about credit cards is his view that you will spend more money if you pay with credit cards than if you pay cash. That statement is of course a gross over-generalization for two reasons. First, while some people will spend more money using plastic than cash, not everybody does. In fact, one study by Carnegie Mellon University found that in some cases using a credit card actually reduced spending.

Second, certain types of spending are insulated from overspending. For example, we use the Capital One Venture Rewards credit card to pay our cellphone bill each month. The cellphone bill is the same each and every month. Paying with cash or by check wouldn't reduce the cost. The same is true for buying gas, paying for health care, and making certain charitable contributions.

Still, the notion that some folks will spend more with credit cards in certain circumstances than if they paid with cash is undoubtedly true. It's just not true for everybody all the time. Dave's claim to the contrary is simply wrong.

But then Dave goes on to harpoon credit card rebates, although his logic is twisted. He writes:

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!

Huh? First, the $6,000 in lost value would be true even if you paid with cash. Second, if his point is not to buy a new car, fine, but what's that got to do with taking advantage of a 5% cash-back rebate offer? This example is timely for me, as we are about to buy a Hyundai Sonata Hybrid, and I plan to use a rewards credit card if the dealer will let me.

Millionaires don't get rich on credit card rewards. In one of his radio shows, Ramsey also said he had met thousands of millionaires, none of whom told him that they got rich off of credit card rewards. While his claim is undoubtedly true, it's also pointless. In the legal world, we call that a "straw man" argument. Nobody I know of has ever suggested that credit card rewards will make you rich. But why would you turn away free money? Post continues after video.

Credit card companies will "misplace" your payment and charge you a late fee. This is where paranoia takes over for Dave and credit cards. In response to a caller's question, Dave claims that credit card companies will eventually "lose" your payment, forget to post your payment on time, and then charge you a late penalty. Don't believe me? Check out this clip. Dave's claim that credit card companies will intentionally "lose" your payment in order to charge a late fee is near the one-minute mark.

This is just plain silly. Here's the deal: If avoiding credit cards is best for you and your family, by all means don't use them. On the other hand, if you can control your credit card use, then by all means take advantage of cash-back or travel rewards. We do, and most of our trip to the Grand Canyon this summer will be paid for in travel rewards from Capital One and American Express.

More on The Dough Roller and MSN Money:

• Capitol One Venture Rewards credit card review
• ING Direct savings accounts for kids launched
• 0% APR balance-transfer credit card offers
• Do I have too much debt?
• How store credit cards trap you
• How long to pay off my credit cards?