Should retirees use credit cards?
It’s important to use credit cards wisely and do your best to only charge for expenses that you can pay off when your bills come due. Unfortunately, many consumers fall into the trap of accumulating credit card interest on their fees, which can ultimately lead to costly debt. And this extends to retirees.
If you’re retired, you might be wondering if it’s a good idea to use credit cards regularly or if it’s better to stick with cash. And the answer is that it depends.
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The pros and cons of credit cards
When it comes to credit card use, retirees should aim to follow the same rules as working consumers – aim to pay off those balances each month before interest accrues. If you are retired and follow this rule, there is nothing wrong with using a credit card.
In fact, charging expenses to a credit card could be to your advantage in retirement. Suppose you are no longer traveling now that you no longer have a job to permanently attend. If you accumulate enough cash back rewards or airline miles, it could make your travel more affordable.
Likewise, many retirees live on a tight budget. If you use your credit cards to pay for basic necessities like food, groceries, and medicine, you’ll be able to earn reward points or cash back for items you were already planning on spending. ‘to buy.
Of course, just as those who work can abuse their credit cards, so do retirees. You should therefore be careful not to overdo it with your credit card charges.
Sometimes expenses add up and need to be paid right away, and if you don’t have the money in savings to cover them, you may need to take out your credit cards instead. But barring any unforeseen expenses, your goal should be to charge only those that you can repay when your bills come due. And if you set a budget, you’ll have an easier time knowing how much you can afford to bill each month.
The danger of credit card debt for retirees
Having too much credit card debt can damage your credit score, making it harder to borrow money when you need it. Now, some retirees might assume that their credit rating doesn’t matter as much as it did when they were younger. But in reality, you should aim to maintain your score in good shape, regardless of your age or stage in life. You never know when you might need to borrow in a pinch, and destroying your score could take that option off the table.
Plus, if you accumulate credit card debt during your retirement, you may have a hard time paying it off in your lifetime. Then your past due debts should be paid out of your estate before your assets are distributed to your heirs, leaving them less. Sometimes this situation is inevitable. But the more savvy you are about the use of credit cards in retirement, the less likely you will be.
The bottom line
Credit cards can be a useful financial tool whether you’re at work or retired. As long as you use your credit cards responsibly, there is no reason to not take advantage of the benefits they offer in retirement.