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January 19, 2009

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Its quite possible that Ramsey uses a 3rd party service to handle his credit card charges and the service might not give the flexibility to take debit only. So maybe thats why they claim they can't take credit cards.

But then Ramsey's website says: "...the Visa and MasterCard virtual monopoly on the debit card industries prohibits merchants from only taking debit cards." so they seem to claim that the credit card companies "prohibit" taking only debit cards.

Costco will take debit but not credit except their own Amex version. So clearly if I can use a Visa debit but not Visa credit card at Costco then its possible.

Whatever the exact reason that Ramsey can't or won't exclude credit cards from his site, their explanation seems questionable.

Jim

Hmmmm, that is very interesting. My first instinct was 3rd party provider too. But if you view credit cards as a religious evil, I would think you would solve it.

Wow! That is pretty bad. Maybe Dave R. needs to review his credit/debit card acceptance policy.

However, despite this Dave still has a great motivating message that has certainly affected my life.

I have a friend in the business (one of the third party companies). Those companies typically require you to take both.

Secondly, I would suspect that Dave Ramsey is getting some business outside the U.S. He is on Fox Business Channel and I have seen his show in both Canada and in Europe while traveling. Further, I have heard that his radio show now ranks in the top 10 syndicated shows in the U.S., which typically extends out to get you business from outside the U.S.

I think you may be over-simplifying the issue. The answer from VISA does not clarify how an online merchant like Ramsey would distinguish a VISA credit card from a VISA debit card at the merchant-consumer level. In other words, is it possible for a merchant (or merchant third-party processor) to distinguish between a credit and debit card simply from the card number that is entered, at least until the card number is presented to the VISA network. I doubt it. For example, Costco takes only only AMEX and debit cards at its stores but accepts all credit cards online. I think you need to ask more questions of VISA before you reach a final conclusion.

The ARCO gas stations in my area will take Visa debit cards, but won't accept Visa (or anyone else's) credit cards, and the pump card reader quickly detects whether you're using one or the other.

So, the data machinery is there somewhere...

Exactly what Toughmoneylove said

Most merchants can tell the distinction because of the Ability to enter your PIN in person

I highly doubt that ALL credit card issuers can distinguish the two from only the card number.

The merchants ability to select is based upon its abilty to DECIPHER, which is generally only allowed face to face.

Please provide an example where an ONLINE MERCHANT has the ability to decipher between debit and credit. Please also provide further evidence that an ONLINE MERCHANT can legally ask for a PIN#, or that using a PIN# is even possible online.

IF you can, then your post has some merit. If not, then your "discovery" isn't that interesting after all.

To be completely honest, I'd be more willing to give Ramsey the benefit of the doubt that I would Visa. I'm sure there is a good explanation like one of the reasons mentioned above.

TROY is right! The difference is code in the card that detects the need or ability to enter a PIN. This is something you can ONLY do at point-of-sale. This is impossible online. If Dave Ramsey had stores set up across the USA that you could physically enter (i.e. Costco), I'm sure he would only take debit at those locations.

I get points when I run my VISA debit as a credit card. It doesn't covert to a credit transaction, the money is taken out of my checking account. So whenever I swipe my card through a keypad, it automatically asks for my PIN. I then hit cancel and my transaction is processed as a credit and I'm presented with a receipt to sign. If there is no keypad, my transaction is automatically run as a credit transaction (i.e. mall food courts, outdoor fairs/bazaars, etc). For every two dollars I spend, I get one point. When I have earned (spent) $20k, then I can get $200 cash back (or gift certificates/store discounts - but I prefer the cash).

Can anyone tell me why my credit union would give me points for using my debit as a credit card? Again, the money is taking almost immediately out of my checking acount...this is not a credit transaction.

There was a merchant in my area that refused to take my business Visa card. Don't know why but he wouldn't. He'd take a personal Visa card but not a business one.

Dave is on XM Sirius radio and I am sure that service reaches into parts of Canada and Mexico. Hence, International acceptance of all cards bearing the VISA symbol.

Actually the Dave Ramsey TV show is carried on the Fox Business Channel which is XM 136 in Canada. Check it out for yourself if you don't believe me at www.xmradio.ca

I'm a fan of Dave Ramsey and I was annoyed at your last post regarding his policy on credit card use on his website. Don't we have better things to do than debate the hypocrisy of a rather small detail of Dave Ramsey's rather large company? You won't see anymore posts by pharmboy on your blog, because I just deleted you from my google feed.

The pin-based transaction for Visa debit point has been made already, so I'll just say that at Dave's live events, they utilize the pin machines only, and take cash for products sold. It seems that you can give Dave the benefit of the doubt here.

oh pharmboy, pharmboy pharmboy pharmboy.

A few thoughts for you all:

1. I actually like Dave Ramsey. Out of all the personal finance "experts" out there, he's the one who I most closely identify with. I don't agree with him 100%, but I do probably agree with him 98%.

2. If you read the initial post (linked to above), the issue is this: Dave Ramsey hates credit cards used in any form. Yet, he allows them on his website. Whether or not he can or can't get credit/debit charges separated, the fact is, he still allows them. At some point, conviction and integrity have to overcome the love of the almighty dollar. So, if he wanted to, Dave could simply refuse to sell online and sell only in stores (many others have done this.) Yet he has chosen not to. It's for this reason that I think he's a bit hypocritical.

3. For those of you who want proof, see above. It's a fact he hates credit cards. It's a fact he accepts them (over other alternatives.) I tried to clarify by asking Visa for their input since I had access to do so. If you want to believe them or not, that's your choice.

4. As far as people leaving the site/not subscribing to it any longer because they don't like my opinion, I'm fine with that. If someone doesn't like what I say, they're certainly free to move on. I have no emotional (who cares?), financial (I give all my profits away), or any other attachment to the issue. But one thing I will say: I won't stop saying what I think just because someone leaves/threatens to leave. This site is about what I've done to grow my net worth, and if I start changing my opinions just to please the crowd, then I have no interest being part of something like that. (And if you're so upset that I picked on poor Dave Ramsey, I think you probably really do need to move on.)

5. Now, back to where I started: I like Dave Ramsey (I'm even thinking of going to see him live when he comes to my town next month.) But this one point is an issue for me, and I'd be an even bigger Ramsey supporter if he either 1) changed his tune on credit cards (which he won't do) or 2) look for alternative ways to sell his products other than accept credit cards on his site -- even if he has to take a financial hit to do so.

Your points are valid, FMF. The only thing I would add is the responsibilities of Dave's consumers. Everyone knows Dave's stance with the credit card industry. Could he do more; i.e. sell via alternative means? Sure. But I like his disclaimer in which he calls the consumer's integrity in question (since any business transaction is primarily a two-way street); a staple of the Dave Ramsey Philosophy & Message.

If a person chooses to go into debt to buy material from a guy who HATES debt, then, to me, that's the person WITH the problem.

Dave teaching the responsible use of debit cards then allowing them on his site (along with the possible use of credit cards) is one thing. But what the heck is going on in the mind of someone incurring interest to purchase material from Dave Ramsey?

I think that the reason he draws the line on credit cards is because they're dangerous for the average person, like me, who can't handle owning a credit card without using it and carrying a balance. I think that if he would condone any use of credit cards, it would be in the manner that FMF encourages. The problem is, since he helps so many people get out of debt, condoning credit cards in the way FMF says is like telling an alchoholic it's ok to drink one drink a day.

Credit cards are not dangerous for the average person. I'm an average person and I've never had a problem with them. I can quit any time......:)

Seriously, I've only had one very brief period in my life where I carried a credit card balance. It lasted for about 6 months and I paid maybe $100 in finance charges. And believe me, I'm a VERY average guy.

FMF

I like the site.
I also respect your convictions.

However, in your rebuttal just above you state:

"It's a fact he accepts them (over other alternatives.) I tried to clarify by asking Visa for their input since I had access to do so. If you want to believe them or not, that's your choice."

I disagree brother. You TRIED to clarify...That is true. The issue isn't whether you tried to verify, or whether VISA is telling the truth. I am positive they are. The issue is the wrong question was asked to begin with.

If you would have asked "VISA, can an online merchant distinguish and therefore select credit vs. Debit by using the imputed card number" then you would have asked the correct question.

So, who cares about VISA's response.

The fact is cards can only be selected for debit or credit in person because of the MAGNETIC STRIP on the back that had the PIN identifier code. That is it. Only way. It is impossible to PIN a card without a strip reader.

So, your post has holes. If you choose to believe Dave is hypocritical because he cannot distinguish forms of online payment yet requests people to be ethical, that is your choice. Thinking someone should not sell and accept payment on the internet is also your choice.

I tend to side with Dave. I think it is good business to sell online, and if some can cheat the system to buy his products, they cheat the system.

Remember, locks only deter the honest people. The crooks break down the door or window regardless.

Troy --

Forget what Visa said -- the main issue for me is one of integrity (as I noted.) Dave says you shouldn't use credit cards, yet he allows them on his site -- this seems disingenuous to me.

FMF, if he didn't allow them on his site, he couldn't transact business online with most third-party payment processing companies. It doesn't matter what VISA might permit; it matters what online payment processors require.

FMF - You are ignoring the technical point to create a false issue. Ramsey doesn't allow credit cards, he explicitly bans them. However, he cannot technically prevent them without stopping all online sales. Your argument is analogous to criticizing an online merchant for allowing fraudulent credit card transactions (e.g., from a stolen card). The merchant doesn't allow fraudulent transactions but it cannot technically prevent them because the card number entered is legit. Your only remaining argument is that Ramsey is a hypocrite by refusing to take anything but cash. Well, what if the cash is obtained from a credit card cash advance?

I understand the issue. But he has a choice NOT to sell if his only options violate his principles. He's chosen not to take that stand.

Melissa,

The reason your credit union only gives money back on "signature" transactions and not "pin" transactions is because the Credit Union gets money from the merchant for it use. However, they get a % of your "charge" when you use a "signature" but generally they only get a fixed Usually less than $1 amount when you use a pin.

Tough --

What if the money paid through a debit card was stolen? We can go back and forth all day with a variety of scenarios that are unlikely just to make a point.

I think it's an integrity issue as I've said before. If you think otherwise, you're entitled to your opinion. But you're not going to change my mind with extreme examples that are tailored to make your point.

Seeing how Dave is so big on using cash & envelopes, couldn't he:

1. Accept cash-only at live events
2. Accept checks only online (yes, you'd have to actually mail the check in, he'd have to confirm it cashed, and your order would get delayed). Maybe there are other systems that bypass the whole Visa monopoly.

Yes, I recognize these steps could be inconvenient, and add a lot of processing cost. But wouldn't holding true to his principles be worth the cost?

I see two sides to this equation.

Dave Ramsey is saying that he does not want credit card transactions and wants his customers to use their debit cards instead.

The customers know what Dave is looking for and have the choice themselves to abide by this or not.

Dave does not want people who listen to him to go out and lease a car, but in the end, he really can't stop them. See the analogy?

WE HAVE THE CHOICE.

Dave has already made the case. We can choose to listen or ignore it.

I actually find it a bit problematic that Dave even advocates or accepts debit cards too.

If you read his website he argues that credit cards can never be used responsibly no matter how responsible you are. Spending on plastic is bad because you don't have to watch cold hard cash leave your hand. Its just too easy to slap down the plastic and not think about how much you are spending. It feels easier and he cites statistics saying you will spend up to 18% more.

This is no different with a debit card than with a credit card. It is true that with a debit card you can get denied once your bank account is empty but that can be on the 18th of the month which leaves you broke for another 13 days, so then you will violate his 7 steps and just start dipping into your 3-6 months of savings and you will fix it next month. But of course you likely won't.

I actually think Dave's system is good for people who have zero will power and zero financial skills and understanding. Unfortunately this is not a small group of people and I do believe they need to do something drastic to get passed the barriers that prevent them from being financially successful.

In that sense what Dave does is very good for them. The debt snowball is another example of an extreme (and mathematically poor) solution to a problem that is created because a person has no will power and needs emotional "wins" to keep moving forward. Again I think this is a rather large group of people and his sytem is great for them.

The biggest problem I have with Mr. Ramsey is his applying his solution to all individuals. His solutions are for people who have a financial addiction. Lets compare it to alcoholism. They need to get treatment and perhaps a support group and probably stay away from alcohol for a long time if not forever.

However, I am not a financial alcoholic. In fact I have been using financial acohol for decades with not even a single episode of drunkenness let alone addiction. So why do I need to be following his treatment for the alcoholic if I have proven I have no problems with financial acohol. Instead I am labelled as being careless, and perhaps even ethically marginal for using something as evil as credit cards but for me they are not an addiction or a crutch, yet I am supposed to be banned from them because other people have an addiction to them.

If he believes responsible people can't use plastic, then he shouldn't either debit cards or otherwise, because he is both enabling and using the short cut he says I as a responsible person can't use.

I think he is a good person who provides good help to people who have financial addictions. The problem is his solutions when applied to non-acoholics actually look a little silly. So I do find that kind of extreme position applied universally to be annoying and when the person applying it violates it even if it's just around the edges well thats really annoying, and honestly, it makes me wonder if its at least a little bit more of a sales pitch but not something to be followed when its just "too inconvenient"

Why don't you inquire with Dave Ramsey or one of his staff on this and then report the truth? That would be much better than for all of us to try to guess the answers.

FMF:

You say "forget what Visa Said"

OK

Then why is the title of the post "Visa Answers my Dave Ramsey Question"

Two funnies here. The first one is obvious, the second is they didn't answer a Dave Ramsey question, because you didn't ask a Dave Ramsey question. You asked a generalized question that doesn't even apply to your Dave Ramsey issue.

But I do understand your point. If you hate CC it would be nice to specifically ban their use to obtain your product. Unfortunately it seems Mr. Ramsey does not have that control.

I think it would be more disingenious to completely ban all forms of online payment thereby punishing the many who do follow the rules and pay with a Debit vs. the few who use a CC.

I believe Costco accepts all AMEX cards

I would never trust a website enough to use my debit card on it. If a debit card gets used fraudulently there is very little protection compared to credit cards.

I don't know about this one. I use a Visa debit card online and I would be highly annoyed by any website that didn't accept my debit card.

If Ramsey's choice was to allow Visa debit AND credit cards OR nothing at all, I think he made the right choice. It's not like he encourages credit card use simply by accepting them as a form of payment. If people choose to use the credit cards over debit cards, that's their choice and maybe they will change their mind after buying his book. :)

We could take this down all kinds of rat holes if we wanted too. Should Ramsey not accept cash because someone may have gotten that cash from a credit card cash advance? Crazy I know, but that's my point.

@ Eden

Or even worse, a pay day lender!


FMF, showing his use of logical fallacies once again.

Visa did not answer, since they weren't asked, how much they charge to accept ONLY debit cards. It may be cost prohibitive to only accept Visa debit cards without also accepting Visa credit cards.

Number One:

I think Dave should sell online. It's the whole point of get the material to the people. Many people do not have access to a Dave Ramsey store. Also who cares what Visa says about their credit cards. It's obvious Dave's site accepts MasterCard. If he is forced to accept CC when he doesn't want to and state's Debit only, then he is following his own principles in the best way he can in order to make his stuff available to people.

Also if you use your debit card as a credit card you have the SAME protection on that card as using a regular credit card. THe SAME no difference. So you shouldn't be worried about using a debit card online. You are protected in the same way as using a regular credit card.

Those of you who say "I don't have a problem with Credit Cards I never carry a balance forward blah blah blah" that's easy to say when you have a job. Try being laid off for months and having to put gas on your credit card so that you can go look for a job. It's easy to judge people. You don't know where they've been or why they are in financial difficulties. It's not only credit cards that get people into debt. It's car loans, student loans, home loans, rent-to-own, financing large purchases, mortgages. Bad investing. So judging people who get out of debt the Dave Ramsey way by saying they are weak is stupid. I think those that don't take the time to learn how to invest, learn how to budget, learn how to best work their finances are stupid.

As for banning the credit cards, if you listened to WHY he doesn't like them you'd find out that you spend MORE money when you use them then if you'd plunk down cash. Why do you need a credit card anyways? You want to spend 20,000 dollars to get fifty bucks in return and pay interest on it? How dumb is that? Even the statistics agree that you spend more when you don't use cash. Why do you think Credit Card companies harass you to use their cards all of the time? It's not because they are doing you a favor.

Even with 100% will power you can still get yourself into a big mess. Bashing people who want to take responsibility and use a known and well proven system that uses Christian principles to do that isn't helping anything.

I recently signed up for Dave's "My Total Money Makeover" to listen to his radio show and I could only use my debit card. There is a link next to the debit submission that simply says "Why don't we accept credit cards"?...it goes on to explain that Dave is completely against customers having credit cards and that the point of the My Total Money Makeover is to show how easy it is to live life without depending on plastic. You can also pay by money order.

Lynn --

The big type on his site says they do not accept credit cards. Here's what the very small type at the bottom says:

"The Lampo Group, Inc. and Dave Ramsey recognize that the Visa and MasterCard virtual monopoly on the debit card industries prohibits merchants from only taking debit cards. As such, it is impossible for us to ensure that every order has complied with our debit card policy. We trust that all of our customers hold EXCEEDINGLY high levels of INTEGRITY and maintain EXTRAORDINARILY high standards of TRUTH and HONESTY. Basically, anyone ordering from us who does not follow this policy is a shady and dishonest character. Don't put yourself in this group. You're better than that. Stick to our policy, NO CREDIT CARDS, and make us all happy."

Dave Ramsey’s highly individualized fiscal regimen is more than problematic on a macro level. It encourages whole segments of Christian enclaves to allow their values and ethics to be formed by a theological sacramentalzing of capitalism. He stirs up sentiments that are increasingly anti-governmental (i.e. he speaks of Obama and leaders with a high degree of arrogance and flippancy regarding highly complex issues), antiwelfare,( he places responsibilities for all financial problems on the isolated person & nuclear family) anti-urban,(the assumption that cities need less help from the government rather than more) which ultimately reflects a great indifference to and ignorance of racial justice) which all points to how disengaged from the troubles of the world this guy is. This is not a biblical understanding of economics but a highly selfish and personalized sense of economic freedom. I.E. I will help you when I get my life together. In the meantime…sorry! He should see if his teaching works in the inner city or in parts of the country where entire towns have been wiped out by corporate greed. Obviously I take a much harsher read on the financial advice of the regressive Dave Ramsey. I am glad you are out of debt. Now…how about your neighbor? Not responsible for him? Hummm? Is this what Christians are like?

Dave Ramsey’s highly individualized fiscal regimen is more than problematic on a macro level. It encourages whole segments of Christian enclaves to allow their values and ethics to be formed by a theological sacramentalzing of capitalism. He stirs up sentiments that are increasingly anti-governmental (i.e. he speaks of Obama and leaders with a high degree of arrogance and flippancy regarding highly complex issues), antiwelfare,( he places responsibilities for all financial problems on the isolated person & nuclear family) anti-urban,(the assumption that cities need less help from the government rather than more) which ultimately reflects a great indifference to and ignorance of racial justice) which all points to how disengaged from the troubles of the world this guy is. This is not a biblical understanding of economics but a highly selfish and personalized sense of economic freedom. I.E. I will help you when I get my life together. In the meantime…sorry! He should see if his teaching works in the inner city or in parts of the country where entire towns have been wiped out by corporate greed. Obviously I take a much harsher read on the financial advice of the regressive Dave Ramsey. I am glad you are out of debt. Now…how about your neighbor? Not responsible for him? Hummm? Is this what Christians are like?

I've been trying to tell people about this for I don't know how long. His own public records show he took on debt to start his "debt-free" company to begin with! Not to mention he came up bankrupt less than two years before he started this business. He magically raised enough cash? Not in a million (since he was millions in debt). As a business owner, even my 3rd party (which I pay the most in my tier because I do the least amount of transactions) allows me to choose what to accept and how. It's a very simple code that during the checkout, digitally scans the number to ensure you entered the correct card. Try it, drop down for Visa and enter a MasterCard number - it will be denied. Saying you can't tell the difference is like saying you can't distinguish between Amex and Visa. It's in the numbers. True processors already have the codes in their database for when it's processed. A central database that's accessible to all their consumers.

There's also a big difference in saying "I don't WANT you to pay with cards" and saying "My site does not accept credit cards no way no how" and the site actually doing so.

Of course, that's all aside from the fact that the average $10k credit debt household, would under his program, spend almost $30k over time as compared to the true solution (that all actually educated financial experts agree to) would have you spending $14-16k.

I just bought a book from DR's website... and it is debit card only. There were no credit card options. End of discussion.

Ramsey is not a hypocrit. Please get off his back.

Mr. Bunker.
Your arrogance and flippant remarks sound much like a Pharisee.Cast the 1st stone.

You obviously live in a city... are pro-government, pro welfare and very judgmental.

FACT: Of all the radio personalities on the air today, ONLY Crown Financial is more aligned with the Bible than Dave Ramsey. Yes, Ramsey is more "in your face" than Crown... but that grabs your attention.

You have a very ugly case of envy, and I encourage you to walk out the baby steps. Then you too... can live like no one else. Don't misplace your hope in politicians. You speak of Corporate Greed but turn a blind eye to the bribery taking place in D.C. Do you honestly believe the Government was not at the center of the economic "crisis"? wake up.

The US Banking system provides the easiest, reliable & free option - ACH. For a Debit Card, you MUST have a Bank Account. Many providers allow you to authorize them to debit the bank account via ACH - you don't even need to accept cards at all (credit or debit). FYI - This system has the same security afforded to all banking transactions. This should also put to rest, I hope, the option of taking cash advance on credit card. There are ways around the VI/MC monopoly, but the fact is merchants prefer convenience over cost optimization - since the customer is footing the bill, anyways!!!

Eric, you might want to read that very site you bought from. Besides - how did you know? Did you go against his teachings and try a credit card? He DOES take credit cards and on his own site it says you CAN use a credit card. PERIOD.

ACH as Param posted is an extremely viable option. One I'm considering to add to my business. It's $30 a month and 3% of transaction (which is comparable to any merchant processing there is out there) and would ensure only bank account backed cards are used. Guess the financial guru hasn't heard of ways to deal in the finance and payment world... interesting...

Are people really this brainwashed into believing that because he says it's so it's fact, even if he contradicts himself the shinier explanation is the best?

When I signed up for MTMM, I only saw where it said "only debit cards" I never even questioned it. It was after I signed up that I saw the disclaimer that you are talking about.

Listen, Dave can preach about not using credit cards till he is blue in the face, but it is up to you. As he says, "I will have to trust that you are being honest and not using a credit card." If you have listened to his show and come to the point that you are signing up to his website and buying his merchandise, then you have more than likely cut all of your credit cards up. Dave can't hold your hand all the time. But he does make you feel a little guilty if you go against his "honor system" policy.

Not sure what all this hype is about but to test I just went to the site click on store added a few things to my cart and went to checkout... the two options that for payment were Debit card and bank draft. No others were listed on the site. Now as to if I could enter in a credit card's information INSTEAD of my debit card I do not know. The option stated "Debit card" and that is the only option on that section so it seems that you are all debating on if I can LIE and use a credit card.

Just do what you want like several have said above either you are going to follow the advice and get out of debt or not.

I worked with Dave. Guess what? We only took Debit Cards. You have way too much time on your hands.

J --

I have too much time on my hands? You're the one commenting on a post that's over a year old.

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