Image source: Getty Images

It’s something you’ll want to steer clear of.

Key points

• Many people use credit cards on a regular basis.
• Carrying balances on those cards could cost you a lot of money and wreck your finances in the process.

Many consumers routinely use credit cards for everyday purchases. And there’s nothing wrong with doing that, provided those credit cards are paid off in full every month. It’s carrying a balance on your credit cards that could get you into trouble financially.

Just ask Mark Cuban. Although the well-known Shark Tank investor enjoys a lot of wealth these days, that wasn’t always the case. In fact, there was a time in Cuban’s life when he didn’t have as much money and he was loaded with credit card debt he struggled to manage. That cost him financially, and so now, he wants others to avoid making the same mistake.

A hard lesson learned

During his 20s, Mark Cuban carried his share of credit card debt. As a result, he spent a lot of money on interest. And so now, he has one key piece of advice for consumers — cut up your credit cards.

In fact, Cuban expressly says, “If you use a credit card, you don’t want to be rich.” That’s because, he insists, the first step to getting rich is to have discipline, and credit cards can make it difficult to keep your spending in check.

In fact, in 2014, Cuban stated that credit cards are “the worst investment you can make.” And that’s advice it pays to take to heart. After all, if you run up a credit card tab that you’re charged interest on, that’s money you’ll be spending rather than investing elsewhere for added growth.

That said, you don’t necessarily need to run out and destroy your credit cards. You just need to set ground rules for using them.

The best way to manage your credit cards

While credit cards can lead to dangerous spending, they also offer their share of perks. For one thing, many credit cards reward you for the purchases you make via points that can be redeemed for things like travel or actual cash back. And you get some degree of purchase protection when you use a credit card to pay for things. For example, if you buy something defective that a merchant refuses to take back, you have the option to dispute the charge.

That said, if you don’t want your credit cards to create a financial nightmare for you, you’ll need to stick to these rules:

• Pay your bills on time every month, because if you don’t, your credit score might take a hit.
• Only charge expenses you can pay off in full each month so you don’t throw money out on interest (paying your bills in full will also help keep your credit score in good shape).
• Read the fine print on your credit card agreement whenever you get a new card so there are no surprises.

Remember, if Mark Cuban can end up with credit card debt, so can you. So it’s important to avoid that fate. If you manage your credit cards well, you can enjoy the perks they offer without causing yourself financial harm. And that should give you the best of both worlds.