The "Shark Tank" investor has long been candid about his thoughts on using credit cards. In a 2008 "How to Get Rich" blog post, he wrote, "Cut up your credit cards. If you use a credit card, you don't want to be rich. The first step to getting rich requires discipline."
Cuban told Business Insider in 2014 that he wishes he had known when he was in his 20s "that credit cards are the worst investment that you can make," admitting that "I should have paid off my cards every 30 days." And, in a 2017 Inc. Magazine interview, Cuban summed up his best personal finance advice in one sentence: "From my dad: Don't use credit cards."
While Cuban's advice assumes that cardholders are carrying a balance that accrues interest, anyone can learn a thing or two from his credit card philosophy.
Below, CNBC Select takes a deeper look at Cuban's advice and what you need to know about the upside of having (and using) a credit card.
Most financial experts agree with Cuban's credit card concerns: Carrying a balance can really set you back.
Credit cards charge notoriously high interest rates and any balance you carry is costing you more month over month.
On average, credit cards charge 16.43% interest, according to the Federal Reserve's most recent data. This rate certainly outpaces any return you earn on your savings and investments. The national average interest rate on savings accounts is just 0.05%, according to the FDIC. Historically, the average return on long-term investments floats around 10% annually.
There's no doubt that carrying a balance on your credit card from month to month can cause your debt to balloon quickly. When you don't pay off your credit card purchases right away, you can accrue interest on top of what you already owe — making it harder and more expensive to pay it all off. With credit card debt at an all-time high level in the U.S., it's a lesson many Americans are learning the hard way.
Are you paying interest on your credit card debt? Consider transferring your debt to a balance transfer credit card that offers an introductory period of 0% interest so you can chip away at your principal directly. The U.S. Bank Visa® Platinum Card offers 0% for the first 20 billing cycles on balance transfers and purchases (after, 13.99% to 23.99% variable APR).
While Cuban recommends cutting up your credit cards, there are some reasons why you might want to ignore this advice. Credit cards can help you build credit, and if you use them smartly, you can even earn rewards, such as cash back, points or miles, on your spending.
It's important to establish a credit history early on, and credit cards can help you do that. A long, healthy credit history can help you achieve a good credit score. And good credit scores are the key to being able to access better financial products, like car loans, mortgages and even small business loans, should you want to follow Cuban's entrepreneurial lead.
The good news is that if you follow some simple guidelines, you can successfully use a credit card and not go into debt. You don't have to use a credit card a lot to improve your credit score, you just have to use it responsibly.
Here are two tips to using a credit card:
While Cuban's advice might protect you from debt, it could also prevent you from improving your credit score, which could have a long-term negative impact on your overall finances. Your best plan of action is to be mindful of your credit card use and spend within your means.
Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."