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Credit card use as we get older

Posted September 26

Swiping a credit card

As we age, our financial needs change. This includes credit card use as we enter our 50's and 60's. Read on for some tips regarding managing credit at this stage in life.

Proper Credit Card Use for Baby Boomers

By: Gary Foreman

As people enter their 50s and 60s, how they manage their credit changes. Gone are the days when applying for their first store or bank credit card was exciting. Now maintaining the credit score they've earned and keeping things simple are more in order.

So how should boomers change the way they use available credit? Should they carry the same number and variety of credit cards? Or is it time to cancel some credit?

To help us answer these and other questions related to baby boomers and how they use credit, we turned to Michael Osakwe of NextAdvisor.com. Michael is a graduate of the University of California, Berkeley with a BA in Political Economy.

Q: As we enter retirement, our lifestyle and needs change. How would that affect how many credit cards we should have?

Mr. Osakwe: While an individual's financial needs might evolve over time, many might find that their relationship with credit cards likely won't change throughout their life. Even though their spending habits and use of credit cards may change as they age, all cardholders can gain from the benefits credit cards have to offer. For example, credit cards provide cardholders with payment protections they will not receive with other forms of payments. While this feature benefits all consumers, it might prove to be especially useful to seniors, who are often targeted by scammers. Additionally, credit cards are a useful tool for building and maintaining credit, and in many cases, seniors still need to maintain strong credit in retirement in order to access services like certain elderly care facilities. In addition, good credit allows for seniors to easily qualify for refinancing or borrowing if they decide to downsize, move, or need funds for other circumstances. Specific decisions regarding how to manage credit cards will, of course, come down to an individual's preferences and circumstances, but there is definitely a place for responsible credit card use in retirement.

Q: Many boomers have earned a good credit score. Can they afford to apply for new cards without affecting that score?

Mr. Osakwe: Provided that seniors responsibly apply for credit (meaning they solely apply for cards that they qualify for and don't apply for multiple cards at the same time), seniors won't have to worry about their scores taking a hit. While it's true that hard credit inquiries negatively impact credit scores, their effect is usually small if you're not applying for a massive amount of credit at a given time. Seniors, like everyone else, can reap the benefits of credit cards by being selective about what offers they apply for and making sure they qualify for any offer before they apply.

Q: Many of us have accumulated credit cards through the years that we no longer use. How can we know which ones we can cancel without hurting our credit?

Mr. Osakwe: Canceling credit cards is generally a bad idea because it immediately impacts your credit utilization ratio, or the amount of credit you're currently using relative to the total amount of your credit limits, which impacts up to 30% of your FICO credit scores. But, if you do decide to close a credit card, you're better off closing newer cards as opposed to old ones. That's because your oldest credit cards have the longest credit history, and thus, closing them makes you look less experienced with credit, at least as far as lenders are concerned. Additionally, the length of your credit history makes up 15% of your FICO scores, so closing older cards can have immediate negative effects on your credit. While this is something you can recover from if you continue to use credit responsibly, for some, this might not be worth the hassle.

Q: Is maintaining a good credit score important for people in their 60s? Many of them have no need to borrow money.

Mr. Osakwe: Maintaining good credit is essential for people in their 60s because in general, seniors with better credit have more living options should they choose to enter a senior care facility and will likely benefit from good credit in the form of cheaper living costs. For example, ...... To read the rest of the article, please head to Stretcher.com HERE.

My thanks to Gary with The Dollar Stretcher for sharing this excerpt. See Stretcher.com. for many more frugal living articles.

How have you changed the way you use credit as you have aged?

12 Comments

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  • vlynn Sep 28, 10:50 a.m.

    jdouglas13 reviews of hvac systems. I'd check consumer reports and energy star to see if they have reviews.

  • jdouglas13 Sep 27, 2:49 p.m.

    Vlynn, thanks for all that great info about the HVACs. During the summer, I had planned to wait until fall to get quotes on systems, thinking I might get a better price than during the summer when they already have lots of business.

    I've heard Duke Energy offering rebates, so I will check with them. Also, I had not heard of Allen Kelly previously, so thanks for that lead as well. Five year 0% financing might be the way to go.

    Vlynn, where do you suggest I check for reviews on HVAC systems?

  • vlynn Sep 27, 1:26 p.m.

    Another hvac idea, I know that allen kelly hvac will give you a free estimate so you'll have an idea of the cost and what options you have for replacement. I'm sure most companies will give you a free estimate. Make sure you look at the warranty & repair issues as well as the price when getting a new unit.

  • vlynn Sep 27, 1:19 p.m.

    jdouglas13 re hvac: check with the company that provides your electricity. They may offer some rebates, discounts, & financing when replacing an hvac especially if you choose a more energy efficient unit. Also, allen kelly hvac offers 5 year 0% year round financing. Some hvac companies only offer the financing deals for shorter periods, but lots offer some kind of financing program.

  • jdouglas13 Sep 27, 11:51 a.m.

    Just one final thought, I don't think the Care Credit card will cover HVAC -- only medical related things.

    Ascherer, what is the ARS card? My HVAC system is hanging on by a thread....

  • jdouglas13 Sep 27, 11:48 a.m.

    Ascherer, I think the problem with multiple cards, as you stated, is when you start to carry a balance on them. That's when folks get into trouble. My DW and I worked very hard to get to a place where we owed nothing, and unless it was a real emergency, did not use the credit cards unless we could pay them in full at the end of the month.

    I think the Care Card is a great tool, and they are available to everyone -- not just seniors. Your credit does not have to be spotless, generally, to qualify. Just make sure that the doctor/dentist/veterinarian takes the card FIRST. Not everyone does.

    The Care Card was a godsend to us when The Princess of Naughty has her cancer surgery last year at NC State Veterinary School. That cost was a doozy!

  • ascherer Sep 27, 8:07 a.m.

    I misspoke everyone. Sorry. Here is the info on her credit card per my Momma:

    What I was talking about earlier with my Momma's "medical" cc is a CareCredit card. She learned about it from her Dentist. It is a cc that can be used for things like dental work, hearing aids, or HVAC. There is no interest charged as long as you make the minimum monthly payments and pay it off in 364 days. On day 365 or 366 interest is retroactively added on the whole balance.

    I got an ARS cc like this when we needed to replace our HVAC. I divided the total by 11 for my monthly payment. I wanted to make sure I paid it off before it was due. Then I cancelled that cc. It had served it's purpose and we no longer used ARS.

    If the need is there, this might be something to look into. It might get you a discount for paying for something in full at a Doc office but you paying it off over 364 days.

    This is just options that is out there for a cc. Only you can figure out what is right for you and your household.

  • Faye Prosser -WRAL Smart Shopper Sep 26, 8:42 p.m.

    ascherer - thanks!

  • ascherer Sep 26, 8:07 p.m.

    I'll ask Momma. She got it because she was having a lot of expensive but related dental work done over 2016/2017. Then she got hearing aids in June. Both the dental and hearing aids were charged to the card. I remember it is only no interest if paid within 24 months. I'll see what I can find out.

  • Faye Prosser -WRAL Smart Shopper Sep 26, 7:43 p.m.

    ascherer - I was not aware of that special medical use/no interest credit card. Who issues it?

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