Kevin O’Leary has a sharp message for consumers drowning in credit card debt: take a hard look at your closet. According to the “Shark Tank” investor, most people only wear about 25% of what they own, while the other 75% is just “dead money.”
The Cost of Unworn Clothes
“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,” O’Leary said in a recent video. “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, men or women. You’re only wearing 25% of them.”
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Instead of letting money sit in unworn clothing, O’Leary argues that investing even a fraction of that cash could make a huge difference in the long run. “That money is dead. It could have made eight percent a year. And you do that for 60 years, you have nothing to speak of,” he warned.
Americans Are Drowning in Credit Card Debt
O’Leary’s concerns come at a time when credit card debt in the U.S. has hit an all-time high. By the end of the fourth quarter of 2024, Americans owed a record $1.21 trillion on their credit cards, up $45 billion from the previous quarter. Holiday spending played a major role, with consumers shelling out $702 billion during the season, according to the Federal Reserve Bank of St. Louis.
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At the same time, more Americans are falling behind on their payments. Over 10.9% of credit card accounts were more than 90 days delinquent in the third quarter of 2024, the highest rate since 2012. LendingTree Chief Credit Analyst Matt Schulz explained the reason behind the rising debt: “Stubborn inflation has shrunk a lot of Americans’ financial margin for error from slim to about none, forcing people to lean more heavily on credit card debt.”
Adding to the strain, the average credit card interest rate has climbed above 20%, making it even harder for those carrying a balance to pay off their debt.
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O’Leary's Simple Investment Strategy
O’Leary believes the cycle of overspending and accumulating debt is setting people up for financial failure. Instead, he suggests a simple alternative: “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.”
With the average American salary at $69,000, setting aside 15%—or about $10,350 per year—into an S&P 500 index fund could build substantial wealth over time.
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