Infomarine On-Line Maritime News - 4 in 10 Americans aren’t confident about their savings — they may be right if these 3 debts aren’t paid off

Credit scores heavily influence rates. Excellent credit of 78 or higher secures new car loans at around 5.18%, while poor credit between 300-500 faces as high as 15.81%. For used cars, that gap widens from 6.82% to a staggering 21.58%.

The Federal Reserve reports auto loan balances of $1.66 trillion in the third quarter of 2025 (4). With average new car loans totaling $41,720, Americans carry substantial vehicle debt that drains retirement resources. A $40,000 auto loan at 6.73% over six years means paying nearly $9,000 in interest alone, money that could have grown in a retirement account instead.

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3. Credit cards: The retirement killer

Credit card debt represents the most dangerous threat to retirement security because of punishing interest rates and revolving balances.

The Federal Reserve Bank of New York reports credit card balances jumped by $24 billion in the third quarter of 2025, reaching $1.23 trillion — up 5.75% from the previous year (4). According to Federal Reserve data, these balances carry an average interest rate of 20.97% as of November 2025 (5).

Unlike mortgages or student loans, credit card debt offers no tax advantages and builds no equity. Carrying $5,000 in credit card debt at 20% interest costs $1,000 annually just in interest, before your principal balance is reduced.

Why clearing these debts matters

If prospective retirees can pay off these three things before retirement, they may feel more secure in their golden years.

Back to Pew Research's survey, when younger adults were asked what worried them about aging, financial concerns ranked second only to health. Thirty percent cited worries about insufficient retirement funds and rising costs.

The research reveals stark disparities. Among lower-income adults, 57% feel uncertain about retirement finances compared with just 15% of higher-income adults. Debt burdens prevent wealth accumulation, which widens this gap.

Taking action now

If you're carrying these debts, consider these strategies to help clear them:

Target high-interest debt first: Use the avalanche method, which prioritizes credit cards, then auto loans, then student loans, based on interest rates.
Consolidate strategically: Personal loans with lower rates can consolidate credit card debt, reduce interest costs and create fixed timelines.
Refinance when beneficial: Student loan and auto loan refinancing can lower rates for qualified borrowers, though federal student loans may offer protections that private loans don't.
Seek professional guidance: Financial advisors can create individualized strategies that balance debt elimination with retirement savings.