NEW YORK (Fortune) -- Peddling credit cards isn't so easy that a caveman can do it.
That seems to be the conclusion Berkshire Hathaway (BRKA, Fortune 500) chief executive Warren Buffett reluctantly reached last year, when he shut down a money-losing credit card business he had dreamed up for Berkshire's Geico car-insurance unit.
The decision was disclosed in Buffett's annual letter to Berkshire shareholders, released Saturday. The letter called Geico's brief foray into credit cards "a very expensive business fiasco entirely of [Buffett's] own making."
Since Berkshire took over Geico in 1996, the company has grown rapidly, thanks to low prices and an advertising budget that has grown 25-fold to $800 million.
Geico is best known for a series of television commercials featuring a gecko that talks with a Cockney accent. Since 2004, the company also has run spots on TV showing preppy cavemen protesting the claim that buying insurance at geico.com is "so easy a caveman can do it."
Geico has been expanding fast -- it has added 4 million policyholders since 2002 and is now the top car insurer in New York, among other places -- and Buffett says he has long puzzled over which other products the company might dangle before loyal Geico customers.
Against the advice of Geico executives, Buffett said in the letter, he lit upon the idea of a Geico credit card. The Geico Platinum MasterCard was born.
"I reasoned that Geico policyholders were likely to be good credit risks and, assuming we offered an attractive card, would likely favor us with their business," Buffett wrote in this year's letter.
Buffett was so high on the idea a few years ago that he urged Berkshire shareholders to use the card.
"Sign up for the new Geico credit card," Buffett wrote in his 2005 investor letter. "It's the one I now use."
But it soon became apparent that people significantly less well off than Buffett were among the leading users of the Geico card.
The card business eventually ran up $6.3 million in pretax losses before Buffett pulled the plug. Berkshire then sold its credit card receivables for 55 cents on the dollar, resulting in additional losses, Buffett wrote.
All told, Buffett's credit card caper cost the company $50 million.
Of course, this is hardly the first time Buffett has called out a business mistake of his own. In his 2008 letter, he said he did "some dumb things in investments," including a purchase of ConocoPhillips (COP, Fortune 500) stock with oil prices near their all-time high and a bet on Irish banks whose shares promptly fell 89%.
And a $50 million loss over half a decade is hardly worth mentioning for Geico. The insurance company posted a $649 million underwriting profit for 2009 (see editor's note below).
Still, the shutdown decision wasn't a happy one for Buffett, who claims he had brushed off questions about launching the credit card by "subtly indicating that I was older and wiser."
By last year, that assessment had given way to a less uplifting one, Buffett said: "I was just older."