Credit Cards Explained: Minimum Payments, FICO Scores, and Getting Out of Debt

The average credit card APR on balances that pay interest is now over 22%, and Americans owe about $1.26 trillion on their cards. Used well, a credit card is a free short-term loan that earns rewards. Used badly, it can cost you for decades. Here’s an example from the video: owe $5,000 at 22.15% and pay only a 2% minimum, and it takes about 72 years to pay off, with $38,450 in interest. Pay a fixed $200 a month instead and you’re done in under 3 years, with $1,768 in interest. Your credit score matters just as much. On a $350,000 mortgage, a borrower with a FICO score in the 620s pays about $56,000 more in interest than someone with a score of 760 or higher. What’s covered: Credit cards by the numbers: balances, APRs, and delinquency today Good and bad reasons to use credit, and the “outlive the loan” test Why minimum payments keep you in debt for years Building a strong credit history and the five C’s of credit The debt safety ratio: how much credit you can handle Grace periods, cash advances, and card fees in 2026 How Visa, Mastercard, Amex, and Discover differ, and how card issuers make money Rewards, affinity, secured, student, and store cards Credit vs. debit cards: your liability if a card is stolen Revolving credit lines and home equity borrowing limits Credit reports, credit bureaus, and what goes into your FICO score Buy now, pay later and your credit How finance charges are computed: the average daily balance method Choosing the right card for how you use it Paying down card debt with the avalanche method Credit card fraud and identity theft Bankruptcy: Chapter 7 vs. Chapter 13 Policy watch: the proposed 10% rate cap and other 2026 developments About me: I’m Tom Robinson, Ph.D., CPA, CFA, CFP®, CAIA, Faculty Director of the Financial Planning and Wealth Management program at George Mason University’s Costello College of Business. This video is for educational purposes only and is not financial, tax, or investment advice. Rates and statistics shown were current as of September 2026 and change often. Subscribe for more on financial planning and wealth management:    / @proftomfinplan   #CreditCards #CreditScore #PersonalFinance #DebtFree #FinancialPlanning