Credit card debt is a common financial burden, but billionaire entrepreneur Mark Cuban says it could be the very thing stopping people from building wealth.
Interestingly, Cuban isn’t alone in his stance on credit card use. Other financial icons like Warren Buffett and Dave Ramsey have also previously argued that high-interest debt is one of the biggest obstacles to financial success.
What Happened: In a 2014 episode of The Dave Ramsey Show, Cuban joined financial advisor Ramsey to discuss credit cards, debt, and wealth-building strategies.
When asked about his stance on credit card use, Cuban didn’t mince words: “If you use a credit card, you don’t want to be rich,” he said, highlighting that paying down credit card debt is a crucial financial step.
He recommended paying off high-interest debt as the “best place to invest” due to its guaranteed returns.
“The best place to invest is to pay off all your credit cards and burn them,” adding, “If you’re paying 15% or 20% interest, paying that down is like earning 15% or 20%.”
Ramsey, renowned for his no-nonsense money management approach and clear-cut financial advice, echoed Cuban’s sentiments and pointed out that “75% of wealthy people say get out of debt and stay out of debt.”
The numbers underscore the scale of the credit card debt issue in the U.S. today.
According to the Federal Reserve Bank of New York, Americans collectively held $1.14 trillion in credit card debt as of the second quarter of 2024—a $27 billion increase from the previous quarter.
The average credit card balance per consumer also rose to $6,329, up from $5,947 the previous year, according to TransUnion.
Why It’s Important: Cuban and Ramsey are not alone in their disdain for credit card debt. Warren Buffett, the Oracle of Omaha, has also been vocal about his preference for avoiding high-interest debt.
Buffett once advised a friend, “If I owed any money at 18%, the first thing I’d do with any money I had would be to pay it off. It’s going to be way better than any investment idea I’ve got.”
However, the Berkshire Hathaway chair isn’t entirely opposed to using credit cards but warns against carrying a balance, which leads to accumulating interest.
Jay Leno, another financially savvy figure, shares a similar view. The former Tonight Show host and self-made millionaire avoids using credit for purchases, even major ones like a home.
“If I can’t afford it, I don’t buy it,” Leno told CNBC in 2018, noting that buying on credit would “drive [him] crazy.”
Image via Gage Skidmore on Flickr
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