Mark Cuban shares the hardest lesson he learned about money in his 20s

Why Mark Cuban and other famous people don't use credit cards

Now a judge on ABC's "Shark Tank" and owner of the Dallas Mavericks, Mark Cuban became a billionaire in 1998 when he and Todd Wagner took their online audio streaming company,, public.

But Cuban wasn't always a master, money-wise.

In his 20s, Cuban struggled to keep himself on the right side of his credit card debt. "The hardest lesson I learned was getting my credit cards ripped up," he told Money during a recent interview. "I would charge something and think I would be able to pay it off and then not be able to. I can't tell you how many credit cards I had ripped up."

Over time, Cuban learned an important lesson. Not only does credit card debt add up quickly, but borrowers end up owing vastly more than they intended to spend in interest if they don't pay it off right away.

Mark Cuban, businessman, investor, film producer, author, television personality and philanthropist.
Mitchell Leff | Getty Images

"Using a credit card is okay if you pay it off at the end of the month," he says. "Just recognize that the 18 percent or 20 percent or 30 percent you're paying in credit card debt is going to cost you a lot more than you could ever earn anywhere else."

The average return on long-term investments sits around 10 percent annually, as Money points out, so paying down debt with a 20 percent interest rate effectively earns you twice as much as you would get through an investment alone.

Above all else, Cuban says, "paying off your credit cards after 30 days, or not even using credit cards, is the smartest investment you can make or not make."

Cuban isn't alone in learning this lesson the hard way: Americans owe a collective $1.021 trillion in revolving credit card debt. That's the highest that total has ever been.

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If you find yourself in debt, there are generally two ways to pay it off: the avalanche method and the snowball method. The avalanche prioritizes paying down the debts with the highest interest rates first, while the snowball focuses on knocking out the smallest debts first.

Tackling the highest interest rates first is technically the most efficient way to handle debt because it eliminates interest as quickly as possible. However, researchers for the Harvard Business Review find the snowball method to be the most effective because you're more likely to stay engaged if you can see your debts disappear.

If you're facing the same uphill battle as Cuban, you can also take inspiration from real people who have paid off thousands:

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Why Mark Cuban and other famous people don't use credit cards