Hopefully you have put — or will someday put — a lot of thought and financial planning into the timing of your retirement. But have you thought about how you will spend money as a retiree?
NerdWallet has reported that one-third of baby boomers — Americans between the ages of 51 and 70 — are reducing their use of credit cards.
However, if you retire credit cards upon your own retirement, it can limit financial options later on.
For example, maintaining a solid credit score in retirement can benefit you financially if you end up wanting or needing to borrow money, such as to:
- Buy a car or refinance a car loan
- Buy a house or refinance a mortgage
- Open a home equity line of credit (HELOC)
- Open a new credit card
- Co-sign a loan for a family member
In all these situations, your credit will be checked. Even if you rent an apartment or move into an independent living facility, your credit is likely to be checked by the landlord or admissions staff.
How to maintain good credit in retirement
Just because there are many reasons to maintain good credit in retirement doesn’t mean you should rack up debt in retirement. But putting even small purchases on a credit card can benefit your credit, provided you pay the bill off in full each month.
As we explain in “4 Reasons You Should Pay for Small Purchases With Credit Cards“:
“If you pay off your credit card bill in full each month, you don’t pay interest. That way, it’s generally smart to take advantage of credit’s benefits — which you’ll reap even when making small purchases.”
Other ways you can maintain or improve your credit in retirement are the same as they are pre-retirement. To learn more about them, check out:
If you’re in the market for a new or better credit card — perhaps one with better rewards if you’re paying the bill off monthly — check out the Money Talks News credit card search tool.
Have you thought about whether you’ll use your credit card differently as a retiree? Let us know below or on our Facebook page.