Dave Ramsey Slams Caller for Using HELOC to Pay Off Amex Debt

On a recent episode of The Ramsey Show, personal finance expert Dave Ramsey received a call from a listener who wanted to use a home equity line of credit (HELOC) to pay off American Express credit card debt and buy a replacement vehicle. Ramsey's reaction was immediate: "Wait, is this a prank call, dude?" He described the idea as "I need to pay off the mafia, so I'll go borrow from the cartel."

The Situation

The caller, claiming to be a longtime listener, proposed taking out a HELOC to consolidate his American Express (AXP) credit card debt and purchase a new car. Ramsey strongly criticized the plan, noting that it converts unsecured debt into secured debt backed by the caller's home, increasing risk.

Context

Ramsey consistently advises against consumer debt, especially debt secured by a home. He emphasizes that using a HELOC to pay off credit cards merely shifts the debt without addressing the underlying spending habits.

What This Means for Investors

While this call does not directly impact American Express stock, it highlights consumer challenges in managing credit card debt—a core business for AXP. It may signal potential credit quality pressures if similar cases become widespread.