Financial security is, without a doubt, one of the most important keys to living well after retirement. Despite this simple fact, it is a pressing concern for millions of people over the age of 65 all over the United States. According to a study that was conducted by AARP in 2006, over 30% of retired people in this country see their current debt levels as one of the biggest problems that they face on a daily basis. To make matters worse, trends indicate that number has only increased with time.
As a result, its become more important than ever to make sure that senior citizens have the financial education they need to insure that they're living well at all times. When it comes to making sure that you or a loved one has a retirement free of credit card debt, there are a few key things to keep in mind.
Take Advantage of Rewards Programs
One of the major benefits of modern day credit cards is that they often come with a wide range of different rewards programs to choose from. Some are as simple as cash back on qualified purchases, while some earn points with retailers like Amazon and others for every qualified purchase that you make. For senior citizens, this is a great way to stretch the value of your money even farther than it was already capable of going. If you can spend the same amount of money that you were always going to and earn additional money on top of it, choosing a card with a good rewards program just makes good financial sense.
Limit the Total Number of New Accounts That You Open
While it may be tempting to open a number of different credit card accounts in order to take advantage of multiple rewards programs, one of the simplest paths to a retirement that is free from credit debt is limiting the total number of accounts that you open in the first place. The FDIC recommends that people have no more than three active credit cards at any one time. Opening too many will increase your ability to spend beyond your means. If you're living on a fixed income, this could easily and quickly create a debt trap that you have a very hard time getting out of.
More than that, having too many accounts open that you're not utilizing will only negatively impact your credit in a way that an elderly person may not have a chance to recover from. Even if you aren't necessarily accruing too much debt, having too many cards that aren't being properly utilized will send your credit score straight into the ground.
Embrace Debit Cards
Another tip for avoiding credit card debt is to embrace the debit card, and everything that they stand for, instead. A debit card is much like a credit card in that it can be used in lieu of cash at most major retailers. The advantage, however, is that it is tied to a checking account and not a line of credit, so you can't over spend without some type of warning. If you don't have the money in the account, the charge won't go through.
Watch Out for Scams
There are an unfortunately large number of scams out there that prey on retirees and the elderly in particular. As a result, one of the most important steps to take to make sure that your retirement is free of credit card debt involves keeping a watchful eye out for these scammers at all times. Never give your credit card or any other personal information to someone over the phone, for example. This information can be used to steal your identity and open up new credit cards in your name that you are otherwise unaware of.
