Why do you need to maintain a good credit score after retirement? This is the most common question of every retiree. Most aren’t planning to take any more mortgages in their life, and they often tend to disregard their credit score. However, your credit score is the key factor that determines the rate of car insurance you get and your eligibility for low interest credit cards. So, you need to maintain and excellent credit score along with an acceptable debt-to-income ratio.
How should you choose a credit card for your retirement years? Well, there are some important factors, which determine the best credit card for your life as a retiree. Let us find out some personal finance tips that will help you keep your credit score in check and choose an appropriate credit card.
3 Factors to consider before choosing a credit card
Your income after retirement: One of the biggest changes that you will face after retirement is a drop in your income. According to the Social Security Administration, 74 percent of single retirees and 53 percent of couples receive half of their income from social security. Further, nearly 46 percent of single retirees and 23 percent married couples receive 90 percent of the income from social security program.
Most of the individuals and couples have low-income levels after retirement. It is important to choose a card with zero annual fees and an excellent cash back program. Avoid cards with changing cash back benefits and rewards policies.
Debt balance that you carry: Most of the retirees, nowadays, carry a balance on their credit card. It is best to pay your debts back in a timely manner. If you carry a balance, it is best to transfer to a card with low interest rate and long introductory zero-interest period. Make sure that the interest rate after the introductory period is low enough to manage any balance in future.
You can start with an on-line research and compare the interest rate and balance transfer fees charged by different providers.
Your retirement plans and lifestyle: Are you planning a healthy retirement with lots of travelling plans? It is a common trend among retirees to travel to different countries. If you have plans to travel across the world, choose a card with zero transaction fees overseas. Most of the providers charge transaction fees of up to 2 percent on foreign purchases.
Find cards that offer great cash back offers for airline travels and hotel stays. If you are looking for a national road trip, it might be best to get a card that offer rewards for gasoline. Make sure to confirm the reward policies and rules to redeem your rewards.
Tips to keep your credit score healthy
- Make full bill payment every month for your credit card
- Avoid maxing out your credit card and keep your usage below 30% of the credit limit
- Keep a track of your credit score with regular credit reports. You can claim your free credit report every year and inform authorities about any mistakes or fraud.
Are you maintaining a good credit score in your retirement life? How do you choose a credit card?
Let us know in the comment section!