It may seem easy for a billionaire like Mark Cuban to advise people not to use credit cards. However, the entrepreneur, Dallas Mavericks owner and star of the TV show “Shark Tank” grew up in a middle-class family and helped pay his own way through college by giving dance lessons. He says that was the best piece of financial advice he ever received, and it was from his father.
Cuban admits that he didn’t follow that advice or even pay off his credit cards every month when he was younger. He now tells consumers that credit cards are “the worst investment that you can make.” The 58-year-old Cuban says he wishes he’d realized in his 20s that the money saved by not having to pay interest on credit cards “is better than any return I could possibly get by investing that money in the stock market.”
Comedian Jay Leno, who didn’t grow up as the millionaire he is today, takes the no-credit policy even further. He says that he didn’t purchase a home until he could afford to pay cash for it. He says, “I don’t carry any debt. I don’t write checks at the end of the month for anything.”
While not everyone can live this way, it’s essential to understand just how much money you’re paying to a credit card company simply in interest on your card by not paying the full balance every 30 days. The average interest rate is over 16 percent. That’s a lot of money that you can spend on things you actually need or at least want.
Credit card companies make it all too easy to ignore that full balance due and get consumers to focus on the minimum — generally 1 to 3 percent of the total balance. That can be tempting when you have multiple bills to pay every month and simply want to keep from becoming delinquent on them. However, it can land you in serious financial jeopardy before you realize it.
If your credit card debt becomes overwhelming, a cash-only policy may be one of best the solutions. With good legal and financial advice, you can start taking the best steps for your own unique situation.
Source: CNBC, “Mark Cuban: ‘Don’t use credit cards’,” Kathleen Elkins |, May 26, 2017