You may be surprised by Mark Cuban’s tips on credit cards.
- Mark Cuban is a billionaire businessman who gives helpful advice from time to time.
- The use of credit cards and their high interest rates are discouraged.
- He believes that you will not use cards if you want to be rich.
Credit cards are a common financial tool. You can earn rewards like points, miles, or cash back when you charge purchases to a credit card. Many cards, especially travel cards, also offer other benefits exclusive to cardholders, such as free airline tickets for companions or free checked bags.
Although credit cards can help you earn rewards, take advantage of benefits and even improve your credit score, there is some controversy about whether you should use them. In fact, there are several financial gurus who have spoken out against the use of credit cards. And billionaire Mark Cuban is one of them.
This is what Mark Cuban thinks about the use of credit cards
Mark Cuban is a self-made billionaire, and the advice he gave others about using credit cards is clear. Cuban wrote on his blog in 2008 that “if he uses a credit card, he doesn’t want to be rich,” and urged his readers to cut up whatever cards they have. He believes that those who want to be rich will avoid using credit because “the first step to getting rich requires discipline.”
Cuban has been consistent in this position for many years, stating in a 2014 interview that he believes “credit cards are the worst investment you can make.” The reason he gave for staying away from cards in this interview was that you can save money on interest by not having debt, and this saved interest that comes from paying cards in full provides a better return than you could get with other investments. Like putting money into stocks.
There are problems with Cuban’s advice
Cuban is absolutely right that having credit card debt is not a good financial decision, and he’s also right that if you have a credit card balance, focusing on paying it off before investing is a smart move. Many credit cards carry sky-high interest rates, sometimes upwards of 17% to 20%, and it’s unlikely you’ll be able to earn that much in the stock market.
However, his advice ignores the fact that it is possible to use a credit card while remaining disciplined in your spending and avoiding debt. You can charge purchases to earn rewards, and if you’re on a budget and financially responsible, you can pay off your card in full before you end up paying a dime in interest.
Not only does this approach allow you to get some money back or other valuable rewards for spending you would otherwise do, but it also allows you to improve your credit score. Loading purchases onto cards, paying your balance in full, and maintaining a reasonable credit utilization ratio can help you build a good credit score that opens financial doors for you.
So while you may want to listen to Cuban about the benefits of avoiding carrying a credit card balance due to high interest rates, following his advice about avoiding credit cards altogether is probably not in your best interest. long-term. Instead, you need to make sure you work on developing your financial discipline, which is correct, it’s key to building wealth, and you should use credit cards as one tool in your arsenal while spending responsibly.
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