You can’t spend money you wouldn’t normally spend, just because you have the credit limit to do so.” However, he drives home the point that “ou can’t spend money you don’t have, even if your credit limit says you can. Healthy usage improves your credit score…which is practically a requirement to obtain any loan, home, rental, or apartment.” If you have the assets to pay off the card immediately, using a credit card for emergency or large purchases could make sense. “After all, credit cards provide access to spending power that you don’t immediately have on hand. There’s another debate to be had that responsible credit card usage helps build wealth, said Jordan Taylor, independent financial advisor with Core Planning. Game the system instead by reaping the rewards without paying any of the cost.” Credit Cards Can Help Build Wealth Credit card companies are betting that you will slip up and leave a balance for them to charge you interest. Winchar agreed, adding that so long as you treat a credit card more like a debit card (i.e., never spending what you don’t have and paying the balance off each month), “It can actually be financially beneficial and responsible to use a credit card for cash back or reward points you will use, such as frequent flyer miles if you travel a lot. If, on the other hand, you carry a balance or have had trouble with carrying a balance in the past, you are probably better off not using credit cards at all. Mark Cuban is on the right track, said Jay Jay Zigmont, PhD, CFP®, founder of Childfree Wealth, but he would add to the end of Cuban’s statement, “if you use a credit card and keep a balance on it….” Zigmont added, “If you can pay your credit cards off completely (to zero balance) each month, you may be able to use it responsibly. Take Our Poll: What Do You Plan To Use Your Tax Refund For? Pay Off the Balance Each Month He does, however, agree with Cuban that maintaining any kind of balance month over month on a credit card is the absolute worst thing you can do for your personal finances.

It’s not that using or not using a credit card that builds wealth, it’s that the ability to responsibly use credit is a determining factor in the ability to generate wealth.” Moreover, he added, “Suffice it to say, I’ve never worked with a wealthy client who didn’t use credit cards responsibly. He said that those who truly build wealth are good at this kind of financial future planning. For sure, using an envelope system or cash system puts the reality of spending money front and center, but properly using a credit card requires us to think ahead about the consequences of our decisions, the bill that will eventually come due, and our ability to pay that bill in full.” “Aside from the obvious benefits of credit cards (points, rewards, etc.) credit cards have the added benefit of forcing discipline with money. Mark Cuban couldn’t be more wrong about credit cards, according to Matt Bruce, CFP®, AIF®, president of the Pointer Financial Group. However, there are a lot of other functions that credit cards serve.

It ultimately isn’t worth it and costs you too much in interest and fees.” Though Winchar is not anti-credit card, he does suggest, “If you don’t have the money, then don’t spend it just because you have credit available. While it’s certainly true that credit cards can lead to amassing a hefty amount of debt, particularly in how easy it is to accrue interest, is Cuban’s point really accurate? For one thing, simply having credit cards can often lead to using them, even when you don’t really need to spend the money, said Fred Winchar, co-founder, president and CEO of. See: 3 Signs You’re Serious About Raising Your Credit Score I’m a Self-Made Millionaire: These Are the 6 Investments Everyone Should Make During an Economic Downturn For example, Mark Cuban told financial expert Dave Ramsey in an interview in 2011, “If you use a credit card, you don’t want to be rich.” Billionaires often have financial advice to give, and seeing as they’re, well, billionaires, we might do well to listen.

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