Self-made billionaire Mark Cuban has a simple piece of money advice for those looking to build wealth: Don't use credit cards.
"Cut up your credit cards. If you use a credit card, you don't want to be rich," the "Shark Tank" star wrote on his blog in 2008. "The first step to getting rich requires discipline."
It's advice he wishes he had heard in his 20s, he told Business Insider: "That credit cards are the worst investment that you can make. That the money I save on interest by not having debt is better than any return I could possibly get by investing that money in the stock market.
"I thought I would be a stock market genius. Until I wasn't. I should have paid off my cards every 30 days."
Thanks to exorbitant interest — the typical credit card charges 16.4 percent — not paying off your balance in full each month can end up costing a fortune in the long run. The average household with credit card debt pays $1,292 a year in interest, reports NerdWallet.
Credit card companies make it incredibly easy to spend money that you don't have: Most cards only require you to pay one percent to three percent of your balance each month, a tempting option if your budget is tight. Perhaps that's why U.S. households now collectively hold over a trillion dollars in credit card debt.
Cuban's solution is to simply ditch the plastic, but most Americans have credit cards. According to CreditCards.com, 71 percent of Americans held at least one credit card in 2014 and 16 percent held five or more.
When you're getting started as an independent adult, it's important to establish good credit — that allows you to make larger purchases in the future, such as a car or home — and one way to do so is by opening a credit card. The good news is, if you stick to a few basic guidelines, you can easily use a credit card without going into debt.
But if you find yourself not making payments in full, or if you have already racked up credit card debt, Cuban's cash-only solution may be the answer for you.
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