A Guide to Credit Cards for Seniors
Updated Jul 27, 2023
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Credit cards are a great way to make purchases, particularly for emergencies, when you don’t have enough cash on hand. However, credit cards come with drawbacks, as you will have to pay interest on any balance that hasn’t been fully paid off each month. If you frequently make purchases and only pay the minimum amount due, you could quickly accumulate credit card debt and find it difficult to crawl back out of it.
It is especially important for seniors to understand the pros and cons of credit cards, as your income may be fixed or lower during retirement. As a result, credit cards can be a great addition to your purchasing power or a financial burden, depending on how you use them. So, in today’s guide, we will cover everything seniors need to know about credit cards!
Some seniors choose to get rid of their old credit cards once they are paid off. Why? Because having a credit card can make it tempting to purchase things even when you don’t have enough money to pay for them. Throwing out unneeded credit cards can be freeing and even a smart financial strategy for some seniors. So this begs the question: do seniors really need a credit card?
The answer depends on your particular financial circumstances. If you find that you have more than enough cash and savings to see you through retirement, then you may not need a credit card. However, there are still various reasons to have one. Credit cards can be incredibly useful when you need to make large emergency purchases without dipping into your savings or selling off assets. Many credit cards also have great perks like reward points or cash back with every purchase.
Pro Tip: People of all ages make the mistake of seeing credit cards as “free money.” Instead, always treat your credit card balance as debt that should ideally be paid off before it can accrue interest.
Generally, credit cards are best for older adults with a steady income (employment, Social Security, investment portfolio dividends, IRAs, etc.). Whether your income is small or large, a credit card can ensure that you can handle large purchases when necessary. This is particularly important when it comes to medical emergencies or similar surprise expenses. With a credit card, seniors can always know that they have an additional way to make payments if and when the need arises.
Though they all come in the same shape and size, there are many different kinds of credit cards. Since banks and lending institutions want to compete for your business, there are various incentives attached to different cards. Some of the most common incentives include:
It would be very difficult for any bank to offer all of these rewards on a single card. In most cases, you will need to choose which rewards or incentives are best for you. For example, if you believe that you will need to carry a balance on your card for an extended period of time, you should focus on finding a card with the lowest interest rate or even a zero percent introductory rate.
As a general rule, you should try to find cards that have no annual fees and low interest rates, but if you have the ability to pay off your balance in full every month, you can focus on other incentives. If you like to travel, you can get a travel rewards card that offers points or miles toward travel-related costs like flights, hotels, and rental cars. If you want to use your card to build a little extra cash flow, you can get a cash rewards card that offers a small percentage of cash-back rewards for every purchase you make.
Many older adults like to spend their retirement years (or near retirement) traveling, which is why travel rewards cards are so popular. You can spend years accumulating points, greatly reducing the cost of a future trip. However, if you are a senior who struggles with cash flow, then getting a cash rewards card (and paying your balance) can help you accumulate extra funds over time. Either way, you should always focus on making your credit card work for you. This means avoiding paying fees and interest so that you can actually enjoy the benefits provided by your credit card.
With all of the options available, you may struggle to find the best credit card for seniors. Any of the following cards are great options for seniors who want to accumulate rewards, avoid fees, and get discounts on everyday purchases:
Best For: Seniors who are members of AARP and have regular medical expenses (even through Medicare or Medicaid), including prescription drug costs.
Key features:
Check out Barclay’s website to learn more about the AARP Essential Rewards Mastercard.
Best For: Seniors who have substantial grocery bills or those who want to save on movie and TV streaming services.
Key Features:
You can learn more about the American Express Blue Cash Preferred Card at this link.
Best For: Older adults who need to make a large purchase and pay it back over time during the first 15 months, as well as seniors who want cash-back deals on regular travel or dining costs.
Key Features:
You can learn more about the Chase Freedom Flex Credit Card on the Chase website.
Best For: Seniors who are interested in cash-back deals and regularly shop at Costco and gas stations.
Key Features:
Visit Costco’s website for more information.
Best For: Older adults who are interested in travel rewards and can spend at least $3,000 within three months of opening the account.
Key Features:
You can learn more about the Capital One Ventures Reward Card at this link.
It’s important to note that nearly all of the credit cards above require good to excellent credit in order to qualify. If you are a senior who has a credit score below 670, you may not qualify for some of the cards listed in the previous section. If you do qualify, you will likely get stuck with a much higher interest rate than applicants with higher credit scores.
Pro Tip: One of the easiest ways to avoid bad credit is to pay your bills on time, even if you can only make the minimum payment.
However, it’s not all bad news. There are various credit cards out there to help people build or rebuild their credit. Here are a few of the best ones:
Best For: Older adults with no credit or bad credit who can afford to make an initial deposit to the account.
Key Features:
Visit Capital One’s page on the Platinum Secured Credit Card for a closer look.
Best For: Seniors with no credit or bad credit who want a secured card with cash-back rewards.
Key Features:
You can learn more about the Secured Sable ONE Credit Card on Sable's website.
Best For: Seniors with no credit or bad credit who do not want a secured credit card with initial deposit requirements.
Key Features:
For more information, visit Destiny Mastercard's website.
Having a credit card as a senior can be a blessing or a curse. The key is to use smart financial strategies to get the most out of your credit card without getting overwhelmed by debt. Here are some of our top tips to help you manage your credit card.
While the cards we mentioned above can help seniors build or rebuild credit, it’s also important to remember that seniors don’t always need to be overly preoccupied with their credit scores. It is always a good idea to pay your debts, but if you are on a low, fixed retirement income, you may not have the cash to pay your bills. This leads many seniors to sacrifice food, medicine, or other necessities just to pay their bills, which can do untold damage to their health and quality of life.
Pro Tip: If you primarily depend on Social Security, you are largely protected from old debts. However, it’s important to remember that other assets and forms of income (including IRA payouts) can potentially be garnished by debt collectors.
Fortunately, Social Security benefits are protected by federal law. This means that they cannot be seized by collections agencies. For this reason, if you are retired, it may be better to simply pay what you can without making unnecessary sacrifices or even ignore older debts. Your retirement income will be protected. The same does not apply to seniors who still work, as collections agencies can still garnish your paycheck. You can learn more about why you shouldn’t worry about debt collectors as a retiree from the interview below between SeniorLiving.org’s Editor-in-Chief Jeff Hoyt and attorney Eric Olsen, Executive Director of the HELPS Nonprofit Law Firm.
So, if you are a retiree, you should not be frightened if you cannot always pay your credit card bills. In most cases, you can arrange a payment plan or, if the debt goes to collections, you can rest easy knowing that your Social Security income cannot be seized by creditors. You can also request debt forbearance from creditors to give you time to accumulate the funds to pay the debt. Finally, like just about anyone with debt, seniors can use debt consolidation to make credit card debt more manageable.
If you have multiple credit cards, high interest rates, or payments that you simply cannot make, you have a few consolidation options to make things easier:
Yes, seniors can get credit cards with few issues. In fact, most seniors will have built up a credit score over the course of their lives, allowing them to qualify for various credit cards. Even if you are a senior with no credit, you can often get a secured credit card to start building credit as soon as possible.
Yes, a retired person can apply and qualify for a credit card. The application process is the same, even if your funds come from retirement income sources like Social Security.
Like most people, debt consolidation loans are one of the best options for seniors to get out of debt. This can help save older adults thousands of dollars in interest by switching the debt from credit cards to a low-interest loan.
As of 2019, studies have shown that the average American aged 56 to 74 has roughly $96,984 in debt. This number has been trending upward over the past few decades.1