"A predatory basis"- Shark Tank investor Kevin O'Leary on how credit cards profit from your bad spending habits

During a speaking event, as shared in his March 2, 2025, Instagram video post, Shark Tank investor and entrepreneur Kevin O'Leary highlighted that credit card companies generate substantial profits by encouraging consumers to spend beyond their means. He said:

"One of the reasons I'm an investor in almost all the credit card companies is they make a lot of money on a predatory basis."

His perspective emphasizes how credit card companies benefit from consumer spending habits that lead to long-term financial disadvantages. Additionally, in a January 26, 2025, Fox5 interview, O'Leary reinforced his views on credit card debt, referring to high-interest rates as "the silent killer in America."

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How credit card companies profit from consumer spending habits, according to Shark Tank's Kevin O'Leary

Encouraging unnecessary purchases

O'Leary explained that credit card companies thrive by promoting consumer spending on non-essential items. In the same Instagram post, he stated:

"They get you to spend on things you don't need. Go into your closet and look at your shoes, your jeans, your t-shirts, and your suits. Just there. Everybody has those."

The Shark Tank investor noted that most people only wear a fraction of their wardrobe, while the rest remains unused. O'Leary described how impulse purchases contribute to financial stagnation, explaining:

"You're only wearing 25% of them. The rest, you haven't worn in two years because you bought them in a moment of weakness."

He emphasized that money spent on unnecessary items could have been invested for long-term financial growth. According to his calculation, consistently investing in an index fund could result in significant savings over decades.

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The impact of high-interest debt

In a clip from his January 26, 2025, Fox5 interview posted on his X account, Kevin O'Leary addressed the consequences of carrying a credit card balance, particularly the effect of high-interest rates. He pointed out that many individuals accumulate debt that becomes increasingly difficult to repay, stating:

"If you're not paying off your credit card, you're paying 21% interest. This is the killer in America, the silent killer."

His statement underscored how high-interest debt reduces financial stability. The Shark Tank investor also described a simple method for consumers to assess their spending habits, advising,

"Take a piece of paper. You don't need a computer. Write down the money you made in three months, 90 days. And on the other piece of paper, how much you spent in the same 90 days?"

He explained that this exercise helps individuals understand whether they are living within their means. According to O'Leary, many people, including wealthy families, often spend more than they earn, leading to reliance on credit cards.

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Strategies for responsible financial management

To counteract the financial burden of credit card debt, O'Leary suggested disciplined spending and investing strategies. In his March 2025 Instagram post, he highlighted the importance of saving a portion of income, explaining:

"So if all you did was take 15% of your salary and put it into a very simple portfolio just by the index, the S&P, you'd have a million and a half dollars when you retire."

The Shark Tank investor advocated for avoiding unnecessary purchases and prioritizing savings. His advice aligns with his overall perspective that credit card companies benefit from consumer spending patterns that can lead to financial instability.

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