08/18/2025
In a world where you can buy a Peloton with one click and spend $17 on a smoothie, it's no surprise Americans love credit cards. But billionaire investor Warren Buffett? Not a fan.
Speaking at the Nebraska Forum back in 1999, the Berkshire Hathaway CEO told a room full of students that if they wanted to get ahead financially, the answer was simple: avoid credit cards altogether. "Just forget about them," he said.
That might sound old-fashioned, especially coming from a man worth billions. But Buffett wasn't moralizing — he was just doing the math. "We're in various businesses that issue credit cards. The American public loves credit cards," he said. "But if you start revolving debt on those credit cards, you can't make any progress in your financial life."
He didn't need to exaggerate. Interest rates alone made the point. Buffett said carrying a balance meant paying around 18% to 20% — and if you're borrowing at those rates, you're not just treading water, you're sinking.
"You can make a lot of money lending it out at 18 or 20%," he added, "but you don't want to be on the side of the equation that's always behind in life."
To make it painfully clear, he laid out the scenario: fall behind by $10,000, and carry that balance at high interest, and, in his words, "you'll never get out of it."
This wasn't some abstract hypothetical for Buffett. He shared that when he was young, he'd managed to save $10,000 by the time he graduated — a modest sum that became, in his view, the foundation for everything he built later. Getting ahead early gave him room to grow.
But if you start out behind — especially carrying high-interest debt — the math starts working against you fast. That's not just a delay. That's a drag.
And that's the trap. A balance that seems manageable in the moment becomes a long-term anchor. By the time the bills, the kids, the roof repairs, and the car troubles pile up, the hole is already dug — and you're working just to get back to zero.
Buffett leaned into a bit of wisdom from colleague Charlie Munger to drive it home: "All I want to know is where I'm going to die so I never go there."
Financially, he said, you have to think the same way — avoid the places that bury people.
He knows, because they write to him. "I get about a dozen letters a day from people who are having terrible problems," Buffett said. In nearly every case, the root cause is one of two things: catastrophic health issues or credit card debt. The first, he said, is bad luck. The second is avoidable.
Some tell him they've already gone bankrupt once and now they're drowning in interest again —unable to touch the principal. "That problem is avoidable," he said. "Credit card debt is something you bring on yourself."
That's why he believes the best move is not to dig the hole in the first place. "It's way easier to stay out of trouble than to get out of trouble," he told the students. "And I guarantee you — if you run a big credit card debt, you'll be in trouble probably the rest of your life."
His advice wasn't about perfection or wealth. It was about positioning. Get yourself to a place where your money is working for you — where you're collecting interest instead of paying it. Even a small head start matters.
"If you can't pay for it, don't buy it," Buffett said. "Get yourself in a position where you can pay for anything."
Not exactly what Visa's marketing team wants to hear — but probably what most Americans need to.
