Best Credit Card Practices for Seniors
Credit cards can be an important part of our financial lives, but they can also carry a degree of risk and temptation.
Updated on Apr 13 2020
Credit cards can be an important part of our financial lives, but they can also carry a degree of risk and temptation. They can be a great way to build, or rebuild, your credit while also making necessary purchases. However, we too often see folks put themselves into debt with inadvisable spending habits. And, spending habits look a bit different when you’re in retirement or getting close to it. So, what are the best credit card practices for seniors?
It’s never a good idea to rack up debt without a plan for it. But, surmounting debt can be much easier to overcome when you’re young. But, as you get older, you have less time to pay down this debt. Because of this, seniors should never add unmanaged debt to their finances. As you near retirement, your circumstances and finances will change, and it’s important to be ready for these changes.
This doesn’t mean that you can’t use a credit card. Credit cards can be necessary to your financial plans. This is especially true during retirement, when you have a bit less flexibility. But, you should never take on debt that you don’t have a plan for paying off, and this goes for debt outside of just credit cards. Credit cards have a place in everyone’s financial lives, but you should avoid making some purchases on your card, just just as some items should usually be purchased by credit card.
Good items to charge
Some purchases are best made with your credit card. For example, online purchases are better made with your credit than debit card. This is because credit cards offer better protection against fraud than other online purchase methods. These discretionary purchases can help you build rewards or points, depending on your credit card. Plus, if there happens to be an issue with your purchase, it is far easier to dispute a credit card charge. But regardless of payment method, you should always be careful before entering your payment information online.
Purchases related to traveling are often good choices for your credit card. Many cards offer points or miles in relation to travel expenses, so these may be a way for you to rack up rewards. Additionally, some even offer travel perks to cardholders. These could be in the form of discounted hotels or car rentals, or access to an airport lounge. If you’re traveling outside of the country, you may be able to use a credit card that avoids foreign transaction fees.
Large entertainment or household items make good purchases for your credit card. These items usually carry larger price tags that can benefit you when it comes to credit card rewards and benefits. Credit cards can also offer you some protection when making a large purchase, as many card issuers will provide pricing and return protections.
Charges to avoid
There are certain payments that you should avoid making with a credit card. You may be tempted to pay your taxes with your credit card. However, that would likely not be a wise decision. When paying your taxes with a credit card, you’ll be charged an otherwise avoidable fee. This can make an already costly time even more expensive .So, be sure to have another payment method ready when tax season arrives.
While it can be difficult, and it’s sometimes your only option, do your best to avoid charging medical expenses to your credit card. These costs can pile up quickly, and the interest accumulated on a credit card could only stand to hurt your finances. If you find yourself in a position where making payments is difficult, try to speak with someone where you received treatment about a payment plan. Many doctors or hospitals will be willing to work with you. This way, you’ll avoid paying a higher interest rate.
Every credit card holds different benefits and advantages, as well as unique disadvantages. With this in mind, you’ll want to look for a card that can benefit your specific situation. These are some of the best credit card options for seniors in or nearing retirement:
This offering from Fidelity is a good choice for those looking to boost their retirement savings. With this card, you can earn 2% cashback on an unlimited amount of qualifying purchases. For every dollar that you spend on qualifying purchases, your account will have earned two points. This comes out to you earning one dollar for every fifty that you spend. And, you have options as to where these rewards are deposited. You can place these directly into retirement savings accounts or HSAs offered by Fidelity. If you’re looking to boost your savings prior to or during retirement, this may be a good option for you.
The Venture Rewards card from Capital One offers excellent benefits if you’re looking to travel through retirement. Travel rewards can be an enticing bonus for credit cards for seniors, and this card offers unlimited double miles on all eligible purchases. This means that spending just $1,000 in a year on this card will net you 24,000 miles. Keeping travelers in mind, this card also waives all transaction fees in foreign countries, so you’ll never be inconvenienced on the go. If you plan on spending a good deal of your retirement away from home, this card may be a good choice for you.
If you’re looking for a simple credit card program with easy, straightforward benefits, the Citi Double Cash card may be an option for you. This card offers unlimited 2% cashback on all qualifying purchases. You earn the initial one percent upon purchase, and the second when paying your bill. This is a simple and easy way to earn cashback that you can put towards budgeting and retirement considerations. It’s a great option for reliable cash back earnings, but it may not offer as much potential earning as other credit card offerings. Be sure to see if it would work for your situation.
Costco has become a staple when it comes to discounts and saving money. And now, Citi is offering the Costco Anywhere Visa card to extend these savings. While this card doesn’t carry an annual fee, you do need to hold an active Costco membership. This card will earn you 4% cash back on eligible gas purchases and 3% on eligible restaurants and travel. All other purchases carry 1% cashback, but that increases to 2% for purchases made at Costco. If you’re on a budget and Costco is already a part of your routine shopping, this card may be a natural fit for your finances. As an added bonus, you’ll earn 2% cashback on any pharmacy purchases made at Costco. So, if you do bulk purchasing as well as prescription pick-up at Costco, this may be a card for you.
Credit card practices for seniors can be a bit different than those at other stages in their life. So, be aware of your situation, and be sure to choose a credit card(s) that will help you towards your financial goals. Additionally, be sure to use your card for appropriate purchases and avoid charges that will hurt your finances. If you’re unsure of your spending strategy, be sure to speak with a financial advisor.
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