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Mark Cuban is a billionaire known for providing great financial advice over the years. But there is one thing Cuba said about credit card with which I totally disagree.
On his blog, Cuban said that you should avoid using a credit card. In fact, he advised readers to, “Cut your credit cards. If you use a credit card, you don’t want to be rich.
Why I disagree with Mark Cuban’s advice on credit cards
While this advice may seem good at first glance, credit cards themselves don’t stop you from getting rich. The rich use credit cards all the time. And they can actually be a tool that helps you improve your Personal finance.
The reality is that credit cards can do a lot of good things for you. They can help you improve your credit rating. This can make it easier for you to borrow money responsibly to do things like start a business or to buy a house (which can help improve your net worth).
What if you use your credit cards for earn rewards, they can help reduce the cost of your purchases. If you get 2% cash back on everything you charge, for example, you basically get 2% back.
Credit cards can help you too tackle debt. You can use a credit card balance transfer to reduce the interest rate you pay. Or you can pay off large purchases over time without paying interest if you get a 0% introductory APR credit card for 12 months. And they make it easy to rent a car or hotel because you don’t have to worry about using a debit card and have a hold that prevents access to your money.
Instead of avoiding credit cards, use them wisely
With so many advantages, listening to Cuba’s advice on giving up credit is shortsighted. Instead of slicing up your cards and dodging them, the key is to make sure you’re using them wisely. This is because credit cards only give you trouble if you end up with a balance that you cannot pay off.
In some cases, people end up with a credit card balance because they have no other choice in a serious emergency. If so, it’s still better to have access to this card, rather than going into debt with very high interest, like a payday loan.
In many cases, however, people enter credit card debt because they don’t budget carefully or because they are living beyond their means. In this case, credit cards are not the problem, but rather a symptom. Instead of being afraid of credit cards, or cutting them off, it is far better to take control of your financial situation so that you can make credit cards work for you.
To get used to live on a budget and monitoring your spending is the real ticket to getting rich. And you can’t shorten that just by writing off your credit card debt and slicing up your cards. Instead, it takes a commitment to your future self to behave responsibly today so that you can have a better future. Working to get to the point where you make that decision is a much better approach than simply ignoring all the benefits that credit cards offer.
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