"That money is dead" - Shark Tank investor Kevin O'Leary warns of credit card pitfalls

Shark Tank investor Kevin O'Leary shared a reel on his social media account, talking about how "credit card companies are robbing you." These companies are known to make billions of dollars of profit each year by encouraging users to buy unnecessary items that they might not even use at one point.

Kevin talked about these tactics and shared them on his Instagram, claiming that this is one of the reasons that he is an investor in several credit card businesses.

He said this credit card debt can quietly erode a person's long-term financial security. His thoughts highlight the dangers of impulse spending versus how it can be minimized by investing wisely.

Kevin admits that even though he invests in these companies, they extract money out of an individual on a "predatory basis." This statement reveals that these companies thrive on credit card debt and the idea of "buy now and worry later." But investing could have been a better option.

The Shark Tank investor explains,

"But when you do that, that money is dead. It could have made 8% a year. And you do that for 60 years"

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Shark Tank investor Kevin O'Leary explains the cons of unnecessary credit card spending

Kevin O'Leary, the Shark Tank investor, gives an example of a regular individual who owns a lot of clothes. He says that daily, they only use about 25% of the closets they have built, and the remaining things are unnecessary. He says that this is exactly how the companies get you. He said,

"One of the reasons I'm an investor in a lot of credit card companies is, they make a lot of money on a predatory basis. They get you to spend on things you don't need."

He asks his followers to go into their closets and analyze everything they own and whether it is a necessary purchase or not. This is a stark reminder that every dollar spent on useless things is financially damaging to a person's wealth.

This money on unneeded items could have been saved for future needs or investments. Kevin says that this habit of overspending, which is also encouraged by how easy it is to use credit cards, might lead people into financial distress.

Revealing his example, the Shark Tank investor says,

"Go into your closet and look at your shoes, your jeans, your t-shirts, and your suits. Just sit. Everybody had those, men or women. You're only wearing 25% of those. The rest, you haven't worn in two years. Because you bought them in a moment of weakness. 'I think I want those sneakers.' You don't wear them."

Now, Kevin urged fans to use this money, which is spent without any needs, and invest it into various financial instruments such as index funds, which could yield a substantial wealth over time.

He says that if individuals in America just spent 15% of their salary on investments, they could accumulate millions by their retirement. Explaining the same, he says,

"You have nothing to speak of and the average salary is America is $69,000. So if all you did was take 15% of your salary and put it into, you know, a very simple portfolio, just buy the index, the S&P, you'd have a million and a half dollars when you retire."

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Shark Tank season 16 episodes are released weekly on ABC at 8 PM Eastern Time on Fridays. They are later available to watch on Hulu.