Credit Cards

Mark Cuban calls this ‘the worst investment you can make’

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It’s something you’ll want to get away from.

Key points

  • Many people use credit cards on a regular basis.
  • Carrying balances on those cards could cost you a lot of money and ruin your finances in the process.

Many consumers routinely use credit cards for everyday purchases. And there’s nothing wrong with doing that, as long as those credit cards are paid off in full each month. You carry a balance on your credit cards that could cause you financial problems.

Ask Mark Cuban. Although the well-known Shark Tank investor enjoys great wealth these days, it wasn’t always like this. In fact, there was a time in Cuban’s life when he didn’t have that much money and he was riddled with credit card debt that he was having trouble managing. That cost him financially, so now he wants others to avoid making the same mistake.

A hard lesson learned

During his 20s, Mark Cuban carried his share of credit card debt. As a result, he spent a lot of money on interest. And now, he has some key advice for consumers: ditch your credit cards.

In fact, Cuban expressly says, “If you use a credit card, you don’t want to be rich.” That’s because, he insists, the first step to getting rich is discipline, and credit cards can make it harder to control your spending.

In fact, in 2014, Cuban claimed that credit cards are “the worst investment you can make.” And that’s advice worth taking to heart. After all, if you run a credit card tab that charges you interest, that’s money you’ll be spending rather than investing elsewhere for additional growth.

That said, you don’t necessarily need to run out and destroy your credit cards. You just need to set ground rules for using them.

The best way to manage your credit cards

Although credit cards can create dangerous expenses, they also offer their share of advantages. For one thing, many credit cards reward you for the purchases you make through points that can be redeemed for things like travel or cash back. And you get some degree of purchase protection when you use a credit card to pay for things. For example, if you buy something defective that a merchant refuses to pick up, he has the option to dispute the charge.

That said, if you don’t want your credit cards to create a financial nightmare, you’ll need to adhere to these rules:

  • Pay your bills on time every month, because if you don’t, your credit score could suffer.
  • Only charge expenses you can pay in full each month so you don’t spend money on interest (paying your bills in full will also help keep your credit score in good shape).
  • Read the fine print in your credit card agreement each time you get a new card so there are no surprises.

Remember, if Mark Cuban can end credit card debt, so can you. So it is important to avoid that fate. By managing your credit cards well, you can enjoy the benefits they offer without causing financial damage. And that should give you the best of both worlds.

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