By Gregg Gonzalez, CFP®
At RetireStrong Financial Advisors, one of our commitments is to make financial literacy simple and practical. Whether you’re preparing for retirement or already enjoying it, understanding how credit cards work can help you make smarter choices with your money and protect your long-term financial health.
The Basics of Credit Cards
A credit card allows you to borrow money from a bank or credit card company up to a certain limit. When you use the card, you’re making a promise to repay that amount later – usually with interest if you don’t pay the balance in full.
Each month, you’ll receive a statement that shows:
- Balance Due: The total amount you’ve charged.
- Minimum Payment: The smallest amount you must pay to keep the account in good standing.
- Interest Rate (APR): The cost of borrowing money if you carry a balance.
How Interest Works
If you pay your balance in full each month, you typically won’t owe any interest. But if you only pay the minimum or carry a balance forward, interest charges begin to add up quickly.
For example, let’s say you owe $2,000 on a card with an 18% APR:
- Paying only the minimum each month could take years to pay off and cost you hundreds (or even thousands) of dollars in interest.
- Paying more than the minimum, or ideally paying in full, saves you money and reduces stress.
The Role of Credit Cards in Financial Wellness
Credit cards can be a helpful tool when managed wisely:
- They build your credit history.
- They provide convenience and fraud protection.
- They sometimes offer rewards like cash back or travel points.
But they can also become a financial burden if balances grow unchecked or interest rates climb too high.
Credit Cards and Retirement Planning
At RetireStrong, we work with many women and couples age 50+ who are looking ahead to retirement. One of the first steps in building a solid retirement plan is reducing high-interest debt. Carrying large credit card balances can eat into your retirement savings and slow your financial progress.
Our approach focuses on:
- Debt Management: Creating strategies to pay down balances.
- Budgeting Support: Helping you align spending with your goals.
- Confidence: Ensuring your credit card use supports your retirement, not works against it.
The Bottom Line
Credit cards are powerful financial tools, but like any tool, they work best when handled with care. By understanding how they operate and making thoughtful choices, you can keep them from becoming a burden and instead use them to support your financial wellness.
At RetireStrong, our mission is to help you stay informed, empowered, and confident about every aspect of your financial life, including the small day-to-day decisions that add up over time.
✅ RetireStrong Takeaway: Use credit cards wisely: pay in full, when possible, avoid high balances, and let your money work for you… not against you.
