In today’s episode, Clark Howard mentioned that half of Americans are in credit card debt, with most having no plan to get out, so they should switch to using cash only. Yet minutes later, he advised a caller looking to increase his credit limit for emergencies who’s probably in credit card debt too to go ahead and get two more credit cards. Unbelievable! Shouldn’t he have told the caller to build an emergency cash fund first and reconsider getting cards with higher limits?
These perks like purchase protection and cash back are overrated. They’re not worth the risk of falling into debt if you can’t pay off the full balance due to an unexpected expense. These “benefits” aren’t there to help you; they’re bait to reel you into more debt. Only those with exceptional discipline can use them wisely without ending up in long-term debt. If 50% are already in credit card debt, that’s proof enough!
Mixed Messages: It’s not clear why Clark suggests obtaining more credit cards while cautioning against taking on credit card debt. It would be more logical to advise saving money for an emergency fund before depending on credit in the first place.
Conflict of Interest: It appears to be in conflict with itself. Credit card issuers frequently fund certain parts or generate income via advertisements. Perhaps that had some bearing on Clark’s advise, even if it wasn’t deliberate.
Situational Advice: Clark may be taking into account various circumstances for every caller. If you’re already in debt, going cash-only might be the best course of action. A larger limit can help someone who wants to manage their credit responsibly by raising their credit score and credit use ratio.
Missed Opportunity: Clark ought to have stressed the value of cash savings before advising the caller to obtain additional cards. An opportunity to emphasize financial responsibility over obtaining more loans was lost.
Benefits Can Be Risky: I concur that benefits like purchase protection and cash back are frequently exaggerated and can lead to overspending. Since 50% of people are already in debt, the majority are falling victim to a debt trap rather than profiting from these privileges.
practical Approach?: Clark’s advise may have originated from a practical standpoint. Given that he was aware that credit cards will be used by people, it is possible that he felt it was more appropriate to provide advice on how to use them properly than to just tell them not to.
It would have been wise for Clark to emphasize that using credit cards requires discipline and that you should only use them if you can afford to pay off the debt each month. No amount of benefits will make up for that lack of discipline.
Role in Education: Clark’s main responsibility as a financial advisor should be to teach individuals how to stay away from credit reliance. He need to have made it more obvious how dangerous it is to use credit cards without having a sizeable emergency reserve.