How Compound Interest Debt Works Against Wealth-Building

“Would you like to save an extra 10% today by signing up for our credit card?” We all have heard this simple phrase countless times when checking out at our favorite stores. It seems like the perfect offer when shopping to save a few extra dollars at the register. However, have you considered the long-term effects it has on your wealth-building?

Retail shopping credit cards (along with several others) can be classified as high-interest credit cards and can set your wealth-building strategy back months, if not years. You will learn:

1.   What are high-interest credit cards

2.  How high interest credit cards impact your wealth building

3.  How to get back on track if you have lots of high interest credit card

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You’ll soon know why saying “no” to the 10% savings at the checkout can equal much greater returns toward your financial goals.

What are High-Interest Credit Cards?

What do Macy’s, Delta Airlines, and Marriott Hotels all have in common? These and many other of your favorite retailers offer credit cards for loyalty rewards and discounts. However, a quick look at the fine print, and you’ll also realize another thing they all share—a high interest rate!

High interest credit cards are credit cards carrying high interest rates—interest that YOU have to pay. According to Yahoo Finance, credit card interest rates have skyrocketed to a nearly 40 years high at an average of 19.04% (Nov. 2022). And it’s not uncommon to see credit cards with close to 30% interest rates during new offers—such as impulse sign-ups offered while shopping.

A few examples of common high-interest credit cards are:

Type of High Interest Credit Card	Average Interest Rate APR
Retail Store Credit Cards	24.10%
Airline Credit Cards	24.45%
Hotel Credit Cards	24.32%
Grocery Store Rewards Cards	24.11%
Gas Station Rewards Cards	24.31%
Restaurant Rewards Cards	23.92%

*Data sourced by Lendingtree.com as of Oct. 2025

Most people only consider the perks, rewards, and discounts these cards offer us. Of course, we all love a good deal, but that one-time savings of 10% at the checkout can actually delay your wealth-building future every year if not used wisely.

How High Interest Credit Cards Work Against Wealth Building

Simply put: you can’t pay yourself first if all your money goes towards paying someone else.

Interest is charged to the cardholder if you carry a balance on the card. The annual interest rate (APR) is what you pay each year, but many cards charge interest on balances every month (sometimes daily!). For example, if you have a $1000 balance on a high interest credit card with a 20% interest rate, you will pay $200 in interest alone without any of it going towards your credit card balance. That’s $200 you could have alternatively invested toward your financial future.

Another thing to consider is that most banks offer less than 0.2% interest rates for savings accounts paid to you for keeping money with them. So, that means you’re receiving less than 0.2%, yet paying nearly 100x at 20% in interest rate to your credit card company.

It starts to feel like your paychecks are making everybody else rich instead of you when you overspend with high interest rate credit cards.

What to Do If You Already Have High Interest Rate Credit Cards?

Do you know what’s in your wallet? Most people don’t realize that they have high interest credit cards. The offers and rewards always overshadow the fine print when opening an account. However, now, you can be aware of what you’re signing up for. It’s easy to fall into the trap of feeling stuck with debt due to high interest credit cards, but there are a few ways to regain control of your finances so your paychecks can be used for their intended purposes—growing your wealth!

If you have high interest credit cards, here are a few tips for avoiding the negative impact on your financial growth:

1.      Pay off your high interest credit card debt and keep a zero balance. There’s nothing wrong with having high interest credit cards as long as you can pay them off monthly. You won’t be charged the high interest rate if you have a zero balance, but you can still enjoy all the perks and rewards they offer.

2.      Transfer your balance to a credit card with zero interest. You can find introductory offers for credit cards offering 0% interest for the first year and other deals for zero interest rates. Transferring your balance from a high interest credit card to a zero-interest card will save you from paying the higher interest on your card balance. Keep in mind that it’s a short-term fix since you can start to incur interest charges on the new credit card if the transferred balance is not paid in full within the promotional period.

3.      Close your high interest credit card accounts. The benefits of credit cards are irresistible, however, not at the cost of delaying building your wealth. If you’re always tempted to spend above your means and unable to pay off your credit card balance every month, it’s best to find credit card offers with lower interest rates.

Credit card companies and affiliate companies are in business to make money. Perks and rewards are a small cost to the high interest rates they charge cardholders for using them. Therefore, your rewards aren’t always as good as they seem since you could end up paying much more in the long term.  Understanding the risks of excessive credit use is very important for maintaining financial security.  Live within your means, keep credit balances low, and only borrow for essential purchases that can be paid off in a reasonable timeframe without building up long-term debt payments that erode your wealth.

Do you find your paycheck going mostly towards paying credit card bills? Paycheck to Wealth would be glad to discuss your situation to determine strategies to keep more money in your pocket and more to go towards building your wealth. Contact Paycheck to Wealth today for your free no obligation consultation.