Apparently Mark Cuban hates credit cards. The outspoken entrepreneur and host of the hit TV show “Shark Tank” told Inc. Magazine that the best money advice he’d ever gotten was from his Dad. Mark’s Dad simply told him “Don’t use credit cards”. Cuban elaborated in another interview with Business Insider:
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..
Should I Cut Up All My Credit Cards?!
I often treat advice from wealthy celebrities like Yelp reviews. There’s some good information out there, but take it with a grain of salt. If we took every piece of advice from every wealthy person, we’d probably be running around in circles without attaining any real success. In this case Mark Cuban told one publication that people simply shouldn’t use credit cards. In the other interview he explains that he’s anti credit card because they’re a bad investment. That’s weird because I don’t think most people view credit cards as an investment.
Of course Cuban’s overarching theme is that credit cards equal debt. Steering clear of debt is very important. The second you aren’t making full monthly payments, credit cards are a terrible deal. Interest rates are typically very high making debt difficult to crawl out of. I would prefer Cuban’s statement to read something like, “don’t use credit cards until you have adequate savings and are financially stable.”
As a travel enthusiast, having a credit card is almost a requirement for the following reasons:
Car Rentals / Hotel Stays: Both renting a car and checking into a hotel often require large pre-authorizations on a major credit card. I know there are often ways to navigate around this, but it’s typically a hassle that leads to an extra process at check in. Furthermore, you’ll need to use your cash to pay for those deposits.
Points / Miles Accrual: This is a points and miles blog, so I’d be remiss if I didn’t mention this one. All of my purchases lead to rewards that might otherwise be unattainable. Flying first class around the world on credit card points isn’t so bad. Many of the trips I’ve taken wouldn’t have ever been possible without credit card rewards.
Purchase Protection: This is a big one. I laugh when I hear people boast about only using cash. Hopefully they’ve never purchased anything that lead to a dispute. Some of the transaction fees on credit card purchases exist to help consumers dispute unauthorized or fraudulent charges. A great example of how credit cards help in this regard is vacation home rentals. I only rent vacation homes that take credit cards as payment. Credit cards offer a piece of mind that I wouldn’t have with cash, check, or money order.
I actually like Mark Cuban a lot, but I think he’s conflating credit cards with debt, which is unfair. Sure, there are people out there that shouldn’t ever take on credit cards. They simply lack self control. As is often the case, perhaps the media didn’t capture Cuban’s entire thoughts on the matter. Anyway, there’s nothing wrong with using credit cards responsibly. In fact, credit cards are probably the easiest, and fastest avenue to earning your next free vacation.