Credit cards are a convenient way to pay for one’s expenses. But when it comes to credit cards for seniors, there are five things seniors should know.
Why should seniors keep a credit card
Even though seniors face a limited budget and may need to reduce their monthly spending, it is not advisable to cut the plastic out if their life. Keeping a credit card as a senior ensures unexpected, high expenses e.g. medical bills can be covered quickly. It helps remain flexible and be prepared for emergencies. Credit cards also help make the most of the retirement. They are an easy-to-use, handy tool for covering e.g. travel expenses or online purchases.
When should credit cards be used as a senior
During retirement, seniors are living on a fixed income per month. Hence spending money the same way as before is not possible. Keeping a close eye on credit card debt and the monthly card balance is an essential step in ensuring retirement savings are not spent too fast. Scenarios such as helping adult children by e.g. paying off their college loans or financing their first home are not a good idea; even setting aside money for an heir is not smart if it means paying your own bills with a credit card to cover today’s expenses. Seniors should first reasonably question the need to purchase something, ask themselves whether they can really afford it and then decide if it is realistic that they will pay off the credit card bill. If, at some point, a senior is no longer able to use a credit card sensibly, it should be taken away.
How should seniors tackle credit card debt
The best thing to do is tackling credit card debt before retiring. This avoids the burden of monthly credit card payments above a senior’s regular budget. To pay back credit card debt, retirement savings or investments should not be used. Instead, coming up with a pay-down strategy a few years before retiring or even working a bit longer to pay off the balances will help seniors have a happier retirement without the pressure of high credit card bills. During retirement, seniors should ensure they are spending within their means and paying off their credit card bill each month.
How many credit cards should seniors have
When Americans retire, they own several credit cards. The decision how many credit cards to keep as a senior should be made carefully. In most cases, seniors will only need one or two credit cards and should therefore cancel expensive credit cards. Signing up for more credit cards should be resisted, as there is no need for seniors to have a large number of cards – it only encourages spending and increases the danger of spending the retirement money on unnecessary things. Switching to senior-friendly credit cards, however, is a great way to keep using a credit card as a senior, while benefitting from special arrangements.
How can credit cards for seniors be used effectively
Many credit cards for seniors offer attractive reward programs and low annual percentage rates besides other benefits such as no annual fee, balance transfers and cash advances. These cards can help reduce monthly or annual finance costs. Are there any special credit cards for seniors? Yes, there are! We will present a few attractive credit card options for seniors in our next blog entry.
+Derrick Shields