For those who are approaching retirement age, the last thing they want to deal with into retirement is credit card debt. No one wants to spend the Autumn of their life struggling with credit card debt. Sadly, an increasing number of seniors citizens are doing exactly that. According to the government, seniors more than ever before are entering into consumer debt counseling protection. We will go over some key tips to avoid getting into credit card debt in your retirement years. These tips work on the basic premise that you will pay off the balance every month in full or at the very least if you do end up having to make payments over time on a large purchase that you keep the payment amount manageable for your budget.
The first step in managing your credit cards in your retirement years is to take an inventory of your credit cards. Which ones carry an annual fee? Do you have more than 3 credit cards? If you do have a card with an annual fee does it offer a reward that actually makes you money every year? If your rewards card with an annual fee does not at the very least give you back the amount you pay into the annual fee, it may be a card worth ditching in favor of a more lucrative card. Next write down the annual APR of these cards, highest to lowest, along with the grace period. The grace period is how long you have to pay your bill after you receive the credit card statement to avoid any interest. You also need to factor in all of a given credit cards fees, including late payments, missed payments, and over-limit fees. Avoid keeping cards with excessive fees. You should trim your cards down to the top 2 or 3. Use the below guide to rate and rank your existing credit cards
Add one point:
* Low APR
* No annual fee
* Good rewards program
* Native English speaking customer service
* Grace period longer than 10 days
Subtract one point for these:
* Excessive fee’s
* Non native English speaking customer service
* High APR
* Lower than 10 day grace period
* Annual fee
* Rewards program that you cannot fully utilize
This point system should help you better rate your credit cards to determine which ones out of the ones you have are best suited for your needs. You may want to consider keeping one Visa and one MasterCard as these are the two major credit cards worldwide, although 3 credit cards is a good number, with the 3rd being an emergency credit card to be used only in the case of an emergency.
Responsible credit card use has many benefits to senior citizens. Credit cards, when used prudently, offer senior citizens protections not available when using cold hard cash or debit cards for purchases. If an item is not as advertised, is faulty or defective, the credit card company will serve to be an intermediary between yourself and the vendor or point of sale to receive a refund or exchange. Fraud prevention is also a priority with credit card companies and you are protected against fraudulent purchases. When you pay by cash, check or debit card you have little in the way of protection, but when you use your credit card to pay for goods and services, the credit card company will advocate on your behalf if there is an issue with the purchase of said goods or services. If you pay off your balance in full every month, responsible credit card use is a boon to any senior citizen.
This article was written by Steven Moore, who has been covering consumer finance and the credit card markets since 2006. You can learn more and connect at his Google+ page.