2 Reasons to Use a Credit Card During Retirement — And 1 Reason Not To

Credit cards often get a bad reputation. But they can make your retirement days less stressful if you know how to make the most of them. So if you’re going back and forth about using a credit card during retirement, I’ve jotted down a few things to consider as you think about your retirement plan.

Older adult looking at computer  in home setting.

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Manage your cash flow

Credit cards may not be ideal in every situation. But they can come in handy if you need access to funds immediately and you know you’ll be able to pay the bill quickly.

Let’s say you have a bill due before your Social Security check hits your account. You may be able to use your credit card to pay your bill. Credit cards work well in this situation because they give you a window to use the money interest-free. The best Chase credit cards, for example, can also help you gain access to big bonuses and longer introductory APR offers that can help you better manage your cash flow. Then, after your Social Security check arrives, you can pay your credit card back in full.

If you have any large purchases coming up, you can look around for the best high-limit credit cards. Some cards come with 0% intro APR on purchases, which means you won’t be hit with interest charges during the introductory period. If you don’t think you will have enough money coming in to pay off the expense within the introductory period, say 12 months, you might want to explore ways to make extra money. Then, allocate enough money to your credit card bill every month so that you can pay it off before interest kicks in.

It’s important to sync your credit card due date with your income to make this cash-flow strategy work. Let’s say your Social Security check arrives around the 15th of every month. You can request to change your credit card due date after that, say the 25th of every month, to give you enough time to pay your bill. As long as you pay your bill in full by the due date, you won’t rack up any interest or late fees. Essentially, during this grace period, your credit card company is lending you money at no cost. This strategy beats the late fees you could rack up from not paying your bills on time.

Get rewarded for your favorite activities

If you’re good at managing credit cards, you can get rewarded for the activities you do the most. For example, if you spend a good chunk of money on groceries and gas every month, you can earn cash back by looking into the best credit cards for gas and groceries. This extra cash can come in handy if you’re on a fixed income.

Maybe you have a bucket list of destinations you want to cross off your travel list. If that’s the case, you’re not alone. The 23rd Annual Transamerica Retirement Survey revealed that 60% of retirees cited traveling as a retirement dream.

Traveling may be a bit easier when you’re retired since you don’t have to worry about a strict work schedule. And if you have a good credit score, you can maximize your experience with a travel credit card.

But credit cards can bring more trouble in this situation

Experian reported a 10% increase in credit card balances from third-quarter 2022 to third-quarter 2023. The average balance among U.S. consumers stands at $6,501. Living with credit card debt can put a strain on your finances at any age. But it’s especially worrisome when you’re depending on Social Security to make ends meet.

If you’re saddled with debt, you might want to hold off on the credit card strategies I’ve described. Your focus should be on paying off your debt as quickly as you can instead of adding new credit cards to the mix. The longer it takes you to pay off your credit card debt, the more interest you’ll have to pay over time.

Credit cards can make your retirement more rewarding if you know how to maximize your benefits. If not, credit cards can become a nightmare. Before you start using a credit card, think about your financial habits and your financial situation. If you can manage a credit card, you’ll be on your way to unlocking more rewards and having access to cash when you need it.

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