Walking away from credit cards

(CNN) -- Credit cards are as much a part of the American economy as $20 bills, but a fervent subset of consumers has sworn off plastic money altogether.

"Credit card debt is our biggest hindrance in being able to take care of our families and set ourselves up for prosperity," said finance student Brad Chaffee, 34, of Charlottesville, Virginia.

"If your paycheck is going toward paying all these credit card companies off, you can't get very far," added Chaffee, who has a Web site called enemyofdebt.com. "You certainly can't use your income as a wealth-building tool -- which is what it becomes when you don't have all these debt payments. I feel very strongly about that."

So do thousands of others, many of whom are followers of charismatic financial expert Dave Ramsey, whose Web site, books, arena rallies and radio show on 400 stations hammer away at the "freedom from debt" theme.

"Debt is not a tool; it is a method to make banks wealthy, not you. Debt is dumb," says Ramsey's Web site, where users can find blunt advice on how to deal with creditors and develop sound money habits.

Ramsey's site doesn't even accept credit cards to pay for his products. Watch what HLN's Clark Howard says about credit cards »

Nearly 80 percent of American families have at least one credit card, 44 percent of families carry a balance on their credit cards, and Americans pay about $15 billion a year in penalty fees, according to Treasury Secretary Tim Geithner's office.

The Credit Card Act of 2009, signed into law in May, is intended to protect consumers from sharp or retroactive interest rate increases, harsh penalties, short payment windows and other abusive practices. It also requires card holders under 21 years of age to have co-signers, prove they have adequate income or pass a money management course.

Another organization hopes to help consumers through education but takes a position that's more moderate than Ramsey's.

"The root issue is not that credit cards are evil. The issue is that a person needs to have self-control," said Chuck Bentley, CEO of Crown Financial Ministries. His radio program, "MoneyLife," is carried on 800 stations.

"If you have self-control, the credit card can be a very meaningful tool to manage your money wisely," Bentley said. Watch how Crown students approach personal finance »

Prudent use of a credit card means taking advantage of reward programs and paying off the balance every month, he said.

"We think that if a person is having trouble paying off their credit card balances, then they do need to stop using them, that they do need to pay down their balances and start to manage them wisely," he said.

Bentley himself carries a credit card and notes that the late Larry Burkett, the ministry's revered co-founder, carried one also. Nevertheless, some people need to listen to Ramsey and go cold turkey, he said.

"They need someone very directive to help them correct their behavior, and Dave does a very nice job with the audience he's speaking to," Bentley said. "He's got a sizable audience that needs that kind of help." Calculate your credit card payment »

Frugaldad.com blogger Jason White, 31, of Macon, Georgia, spent six years working with distressed customers at a major credit card company's service center.

"I heard a great analogy once, that credit cards are kind of like power tools: They're a great convenience, they can get the job done faster, but they can be dangerous, definitely, in untrained hands," he said. "And I would consider untrained hands to be someone who is not disciplined financially, or maybe they're young and haven't had the exposure to credit and debt.

"But for the average American, I don't have a problem with them having one or two credit cards" to combine recurring expenses into a single monthly payment, he added.

White, a software manager by day, draws the line at carrying a balance.

"I think it's dangerous," he said. "And one of the things we've seen lately in this recession is that some of the rules are changing, and credit card companies are upping interest rates without a lot of warning, if any warning, reducing credit limits -- and sometimes if you've got a really large balance out there, you can get caught."

Fellow blogger Chaffee agrees that some can handle credit cards, "but I still think there's a better way."

"I think if we just use cash and debit cards, it's a much better idea," he said. "Credit cards are too risky, and when something does happen to you and you have a bunch of debt -- like for instance when life happens to you, you lose your job or whatever it may be -- you've got all this debt in your life, whereas if you didn't use credit cards and you didn't use debt, then you might be in a little better situation."

Crown Financial Ministries' Bentley cited Proverbs 22:7 to drive home the point: "The borrower is servant to the lender."

"We believe excessive debt is a clear warning sign in Scripture," he said, "that people who leverage beyond their means are in danger of being enslaved. ... We think in the current environment, debt elimination is essential."

All About Consumer Credit and Debt • Recessions and Depressions