Ambelled by direct medical expenses, Valerie Towe and her husband, Paul, saw their charge to begin to inflate last year.
Faced with a constant flow of invoices for 77 -year -old chronic obstructive pulmonary pulmonary disease, rheumatoid arthritis and neuropathy, Valerie began to exploit credit cards to follow.
“I could not reach both ends,” said Valerie, 65, in Yahoo Finance.
The cost of the weekly grocery store added to the tension-almost doubling last year, she said. And to top it all, while his care tasks increased, Valerie moved to part -time employment.
“When you are a caregiver, you cannot work full time,” she said.
The worst of this one, as anyone knows who overturned the month’s credit card balances, is the hot air balloon debt which accumulates when you can only pay the minimum amount of the balance on credit cards responsible for interest rate exceeding 20%.
That’s all Valerie was able to do, and the result is a credit card debt cutting the blow almost $ 30,000, she said.
Almost half of adults aged 50 and over who carry credit cards to use credit cards to pay basic subsistence costs, according to a new AARP report. And about 3 out of 10 elderly people with credit card debts have more than a year ago.
More sober: almost half of them owe $ 5,000 or more and 28% have a balance of $ 10,000 or more.
This has serious repercussions for retirement savings.
“Many more elderly Americans with credit card debts that hope to retire soon will have to make the decision difficult to repay the debt or save for retirement,” Indira Venkat, principal vice-president of research at the AARP. “For those who have already retired and who live on a fixed income, it may be a challenge to both reimburse a credit card and reach both ends.”
Find out more: Best ways to repay credit card debt
She is right on that one. When people say what they regret most after their retirement, a biggie retires with too many debts.
In 2024, nearly 7 out of 10 retirees with a debt said they had a credit card debt in circulation, by a investigation of the Research Institute on the benefits of employees (EBRI). It is up compared to 4 out of 10 four years ago.
And while the increase in the cost of grocery stores, housing and vehicles is the by-products of sticky inflation, one of the largest culprits in credit card debt is unconditional medical costs such as prescription drugs, with which towels are struggling with. Dental and viewed care is also added, said Venkat.
If they could go up the clock, almost a quarter of retirees say they would have made the credit card and other debts a priority before leaving the labor market, according to a new Loyalty investment report.
The emergence of credit card debt for older Americans does not soon fade. About 1 in 5 plans to take more than five years to reimburse it, according to the AARP report.
The decision to repay the debt or save for retirement is a reality for many older Americans as they find themselves near retirement. More than half of those who work currently say that their debt interferes with their ability to save, a recent report by the Transamerica retirement studies center found.
It is also disturbing that the debt pushed them to exploit existing retirement savings. One worker on 3 has taken a loan, early withdrawal or withdrawal of difficulties from their 401 (K) or his similar plan or Ira, by Transamerica.
Among those who contracted a loan or withdrawn from their 401 (K) or the similar plan, the most frequently cited reasons are medical invoices and the reimbursement of credit card debt.
More evidence: last year, withdrawals of difficulties increased out of 2023, with 4.8% of participants who operated their retirement savings, compared to 3.6% Vanguard group, which administers 401 (K) represents nearly 5 million people.
When you withdraw from a traditional 401 account (K), you are slapped with income tax, and generally a penalty of 10% if you have less than 59 1⁄2.
Find out more: What is the retirement age for Social Security, 401 (K) and withdrawals will go?
Here is an easy first step: call your credit card transmitter and ask for an interest rate below, highlighting – if you are true – your payments in time.
If your supplier does not move, buy a 0%balance transfer card. You can move your current credit card debt high at a new card with a promotional rate of 0% for up to 21 months. However, there are transfer fees from 3% to 5% of the total amount you transfer, but this interest -free period will give you a little space to start repaying the balance.
The automation of your monthly payments and payment more than the minimum is the ticket to eliminate your debts.
There are some strategies to consider to reduce your overall debt. The Avalanche method consists in repaying the debt with the highest interest rate first. Other people opt for the snowballing method, which focuses first on smaller debts. I am at Avalanche school, but everything that works best for you.
The alternatives also include the consolidation of all your credit card debts with a personal loan. It is possible to win an interest rate as low as 7% over seven years if you have a strong credit, which is unfortunately not often the case if you have accumulated too many debts.
Do you have a question about retirement? Personal finances? Something related to the career? Click here to file a note at Kerry Hannon.
If you have several sales on several cards and a balance transfer card or a personal loan will not cover total debt, I first recommend that I tackle the highest annual interest rate, while making payments on the rest to regularly reduce interest costs.
A non -profit credit advisor can also be able to negotiate with your credit card issuers to give you a break on the prices, but you will pay costs for the service. The Ministry of Justice website provides a list approved credit council agencies.
Find out more: Best balance transfer cards for 2025
Other resources include AARP credit card reimbursement calculator and the National Foundation for Credit Councils.
Easier to say than to do, I know. As Valerie said to me: “I’m stuck. I don’t know what I’m going to do … for the moment. I’m a bit in limbo with that.
Kerry Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and author of 14 books, including “In control over 50 years: how to succeed in the new world of work “ And “never too old to become rich”. Follow her Bluesky.
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