How To Become A Millionaire Using Credit Cards

Here's how to become a millionaire... or, more accurately, how not to become a millionaire.

A few years ago, I did something dumb. I took out a new credit card, maxed out the balance transfer offer, and had the money deposited into my checking account.

From there, I funded my old brokerage account at ShareBuilder, using this balance transfer money.

I thought with just a few of the right stock picks, I would instantly double my money -- and maybe even become a millionaire with enough effort and savvy trades. 

Here's what happened: my stock started tanking, as if on cue, almost immediately after I bought it. By the time I finally sold, it had lost a significant portion of its original value.

Now I owed my credit card company money... that balance transfer wasn't given for free! On top of that, I paid a 3% balance transfer fee. It was a nightmare. I spent lots of time sweating and cursing myself. I felt like a moron because I was a moron, in that instance.

Moral of the story: don't use credit to become wealthy. Don't try to become a millionaire overnight or using other people's money. Build your own wealth. Risk your own wealth. Never owe others. Millionaires don't owe other people money; it's like Shakespeare said -- well Hamlet, anyway: "Never a lender nor a borrower be."

Eventually, I repaid my debt to the credit card company, and would never take a risky stock bet again -- unless it was with my OWN money, not borrowed money. And even then, I would hesitate: as explained in The Richest Man in Babylon, you should never invest in something where there is a chance you could lose your principal. (Brilliant book, by the way.)

Better to be a bit more conservative. Care for your principal, be patient, make intelligent investment decisions... not greedy ones.

Comments

[Iliana]

I totally agree with you. Credit cards can lead you to lose all your money and still owe them. i have many, but I never use them.

[GReg]

Don't beat yourself up too much.. you run a site that helps people now and sounds like you took care of it yourself instead of having family bail you out