Credit Cards

This essential rule from Mark Cuban could save you thousands

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It is important to follow.

Key points

  • Billionaire Mark Cuban wasn’t always rich.
  • There is a movement that he says is essential for financial well-being.

Mark Cuban is known not only as a very rich man, but also as an astute investor. But the Shark Tank billionaire didn’t start out rich. In fact, Cuban spent much of her 20s struggling to keep up with his bills. At one point, in fact, he had to resort to odd jobs to make ends meet.

But through his struggles, Cuban learned a thing or two about growing wealth and gaining financial security. And if you want to follow in his footsteps, there is one rule worth following.

Avoid credit card debt like the plague

Mark Cuban insists that racking up credit card debt is bad news. And he’s absolutely right for one key reason: The money you spend on interest is money you won’t have available to invest, pay bills, or use to improve your financial situation.

Cuban himself is no stranger to credit card debt. When he was 20 years old, he accumulated his fair share of it. But since then he learned his lesson. And now, he wants to help consumers avoid falling into a similar trap.

To be clear, Cuban doesn’t think all debt is bad. Taking out a mortgage to buy a house, for example, is a smart financial move.

But mortgage rates tend to be much lower than credit card interest rates. Plus, a mortgage helps you own a home, an asset that can appreciate in value over time. You can then sell that asset at a profit. The things you buy with credit cards probably don’t fall into the same category.

Should you get rid of your credit cards?

Cuban doesn’t think you should throw away your credit cards. Rather, he should simply do his best to pay off his balances every month and not carry them forward. If he does, it could actually help you build credit and, more importantly, avoid spending money on interest.

That said, there are some steps you can take to avoid building up too high a credit card balance. For one thing, follow a budget. You can use a spreadsheet or budgeting apps to put one together, but the key is knowing how much you can afford to spend in different spending categories.

Next, don’t let the charges pile up on your credit cards. Rather, check your balances regularly throughout the month. If you find that you’re racking up too many charges, you can reduce your expenses until your next billing cycle.

Avoid a dangerous trap

Once you get into credit card debt, it can be difficult to get out of it. And then it is better to avoid it in the first place.

Now rest assured that if you already owe money on your credit cards, you’re in good company. After all, Cuban himself has been there. But if that’s the case, do whatever you can to cut your expenses or increase your income with a second job so he can eliminate that debt as quickly as possible. Doing so could save you a lot of money by not having to pay as much interest to the credit card companies.

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