How to Pick the Best Credit Card in Retirement

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Yes, you’re retired, but you still need to work on your credit score. If your household debt — be it a mortgage or car loan — is paid off, responsible use of credit cards is the best way to keep that score high.

You might think: Why bother? After all, you don’t plan to ever apply for a mortgage again. But you’re still driving a car, right? Credit scores impact the auto insurance rate you pay, and the car loan terms you get.

And let’s not forget that an excellent credit score will make you eligible for the best credit cards. When you’re no longer actively generating income, you want a card that pays you the best cash-back or travel rewards.

To find your one best card, stop by our Solutions Center and search for credit cards offering different types of rewards. Several factors will determine the best type of card during retirement, including:

Your income

If you’ve reached the $1 million benchmark for retirement savings, income in retirement should not be a problem. But for a large percentage of people, that’s unlikely to happen.

If you’re facing a reduced income, you want a card that works for you. That means a card that rewards you for expenditures that are unavoidable. Look for a card with no annual fee whenever possible. Also look for:

  • Generous cash back on basics like gas and groceries. Many of these cards do not have an annual fee. Some do charge a fee, but the rewards may be generous enough to make the card worthwhile.
  • Easily understood terms. Avoid a card with frequently changing cash-back bonuses that you have to keep track of and register for.

Your lifestyle and planned activities

Many retirees look forward to extensive travel. In that’s you, shop for a card with:

  • No foreign-transaction fee. Many cards have a foreign-transaction fee of 2 percent or 3 percent, which will unnecessarily increase the cost of overseas purchases.
  • Generous travel rewards. This might include airline miles and hotel stays, or generous bonus miles as part of an introductory reward when you sign up for the card.

If driving will be your primary mode of transportation — perhaps you’re embarking on a national tour in your RV — look for a card that offers the best perks on gasoline purchases.

Whether you carry a large balance on your current card

A growing number of retirees carry a balance from month to month. That’s not good. You’ll want to retire that debt as quickly as possible. So, look for a card that:

  • Offers a generous balance transfer deal. Some offer as many as 18 months with zero percent interest. Have a plan to pay the balance off before the introductory rate expires.
  • Has zero or a low balance transfer fee. Paying a fee like this can eat into the advantage of making the transfer in the first place.
  • Has a low interest rate after the initial zero percent rate expires. A low rate offers some protection if you slip up and carry a balance again.

For more tips, check out:

Are you managing your credit cards responsibly in retirement? Tell us more in comments below or on our Facebook page.

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