Kevin O' Leary Suggests Everyone Have A Credit Card With A 'Very Low Credit Limit' Of $2,000 Plus One High Limit Card – 'That's How You Protect Yourself'

In an era where technology dominates and online shopping continues to grow, the threat of credit card fraud and data breaches remains a significant concern for consumers. Kevin O'Leary, widely recognized from the television show “Shark Tank,” offers a simple yet practical strategy to enhance financial security in the digital landscape. According to O'Leary, the solution lies in the strategic use of credit cards.

O'Leary, in a YouTube short, emphasizes the importance of having at least two credit cards. He advises assigning one card with a “very low credit limit,” suggesting $2,000, exclusively for online transactions. This approach, O'Leary argues, limits potential financial damage to $2,000 in the event of a security breach. “That’s how you protect yourself,” he states, underlining the method’s effectiveness in containing the fallout from unauthorized access to one’s financial data.

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The second card, according to O'Leary, should be reserved for in-person purchases or transactions that do not involve online platforms. This separation not only helps in managing finances more effectively but also in enhancing security measures by distinguishing between digital and physical spending avenues.

While Kevin O’Leary’s advice focuses on managing credit card use for online and offline purchases, it’s crucial to delve deeper into the inherent risks and potential strategies for safer credit card usage. Credit cards, when not managed wisely, can lead to spiraling debt, primarily from high interest rates and the temptation to spend beyond means. The risks include getting into debt by spending more than you can afford, missing payments that can impact your credit score and incurring heavy interest charges by carrying a balance from month to month​​​​.

Credit cards, however, offer benefits compared to debit cards, especially in terms of building a good credit score, earning cashback and rewards and providing better security against fraud. Unlike debit cards, where fraudulent transactions directly affect your bank account, credit cards offer a layer of protection as the money is technically the bank’s. This difference gives you more time to report and dispute unauthorized transactions without immediate financial loss​​.

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To mitigate the dangers of credit card use, adopting responsible financial habits is key. Tips include paying off your balance in full each month to avoid interest, setting up automatic payments to ensure you never miss a payment and keeping your credit utilization ratio low.

O’Leary’s strategy for using credit cards can offer a level of protection against fraud, but it’s consumers should navigate credit card use with caution, especially considering the broader context of credit card debt in America. As of 2024, Americans find themselves $986 billion in credit card debt​​. This statistic emphasizes the importance of using credit cards wisely, especially if following O’Leary’s advice to have at least two cards for different types of purchases. It’s not just about protecting against hacks; it’s also about managing your finances responsibly to avoid falling into the debt trap that many Americans face.

For individuals looking to navigate the complexities of credit card usage and debt management, seeking the guidance of a financial adviser can be invaluable. Financial advisers offer assistance with managing finances, including help with creating an emergency fund, starting investing and paying off debt. They provide a plan for meeting financial goals and guide progress along the way, which can include strategies for debt reduction and investment management. 

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*This information is not financial advice, and personalized guidance from a financial adviser is recommended for making well-informed decisions.

Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications including Zacks, The Nest and eHow. She is not a licensed financial adviser, and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes the information contained herein is reliable and derived from reliable sources, there is no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information.