A Guide to Credit Cards for Seniors
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!
Table of Contents
Do Seniors Need a Credit Card?
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.
What to Look for in a Credit Card for Seniors
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:
- No annual fees
- Reward points
- Cash-back deals
- Travel perks and rewards
- Low interest rates
- Discounts on selected products
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.
What Is the Best Credit Card for Seniors?
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:
Barclays AARP Essential Rewards Mastercard
Best For: Seniors who are members of AARP and have regular medical expenses (even through Medicare or Medicaid), including prescription drug costs.
- No annual fee
- Variable interest rates as low as 16.74% (depending on your credit score)
- 3% cash back at pharmacies and gas stations
- 2% percent cash back on general medical expenses
- 1% percent cash back on all other purchases
Check out Barclay’s website to learn more about the AARP Essential Rewards Mastercard.
American Express Blue Cash Preferred Card
Best For: Seniors who have substantial grocery bills or those who want to save on movie and TV streaming services.
- No annual fee for the first year (then $95 per year thereafter)
- Introductory 0% APR for the first 12 months, followed by interest rates starting at 13.99% (depending on your credit score)
- 6% cash back at U.S. supermarkets up to $6,000 per year in purchases
- 6% cash back on select U.S. streaming subscriptions
- 3% cash back at U.S. gas stations and transportation costs
- 1% cash back on all other purchases.
- Up to $300 credit if you spend a minimum of $3,000 within the first six months
You can learn more about the American Express Blue Cash Preferred Card at this link.
Chase Freedom Flex Credit Card
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.
- No annual fee
- Introductory 0% APR for the first 15 months, followed by interest rates starting at 14.99% (depending on your credit score)
- 5% cash back up to $1,500 in purchases in certain bonus categories (categories can change every quarter)
- 5% cash back on travel
- 3% cash back on pharmacy purchases and restaurants
- 1% cash back on all other purchases
- No minimum to redeem cash-back deals
- Up to $200 bonus if you spend a minimum of $500 within the first three months
You can learn more about the Chase Freedom Flex Credit Card on the Chase website.
Citi Costco Anywhere Visa Card
Best For: Seniors who are interested in cash-back deals and regularly shop at Costco and gas stations.
- No annual fee
- Standard variable interest rate of 15.24% (depending on your credit score)
- 4% cash back at gas stations
- 2% cash back on all Costco, dining, and travel purchases
Visit Costco’s website for more information.
Capital One Ventures Reward Card
Best For: Older adults who are interested in travel rewards and can spend at least $3,000 within three months of opening the account.
- $95 annual fee
- Standard variable interest rate starting as low as 15.99% (depending on your credit score)
- Earn 2 miles (travel rewards points) per dollar on all purchases
- Earn 5 miles per dollar on hotels and rental car costs
- Earn 60,000 miles when you spend at least $3,000 within the first three months
You can learn more about the Capital One Ventures Reward Card at this link.
Credit Cards for Seniors With Bad Credit
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:
Capital One Platinum Secured Credit Card
Best For: Older adults with no credit or bad credit who can afford to make an initial deposit to the account.
- No annual fee
- Required refundable deposit between $49-$200 to use as collateral based on your credit score and desired credit limit
- Standard variable interest rate of 26.99% (depending on your credit score)
Visit Capital One’s page on the Platinum Secured Credit Card for a closer look.
Secured Sable ONE Credit Card
Best For: Seniors with no credit or bad credit who want a secured card with cash-back rewards.
- No annual fee
- Required initial deposit of $10
- Standard variable interest rate of 10.24% (depending on your credit score)
- Up to 2% cash-back rewards
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.
- $59-$99 annual deposit
- Standard variable interest rate of 24.9% (depending on your credit score)
- No monthly fees
For more information, visit Destiny Mastercard’s website.
Tips for Making the Most of Your Credit Card
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.
- Unless it is an absolute emergency, never spend more than you can reasonably pay off in a short period of time.
- Ideally, pay off your full balance every month before it has a chance to accrue interest.
- Do not use your credit card just to get the rewards, especially if it will require you to carry a balance on your card. The cost of interest always outweighs cash-back benefits, travel, or other reward programs.
- Read the fine print to make sure you are taking advantage of all of your card’s reward programs. For example, if you need to spend a certain amount within the first few months to qualify for a bonus, make sure you keep track of expenditures so that you can get the reward. However, do not spend more than you can afford to pay back; otherwise, the cost of interest will negate the benefit of any bonus.
- Some types of rewards expire after a set period of time. Again, always read the fine print on your credit card statement and make sure you use your rewards while you still can.
How Seniors Can Get Relief From Credit Card Debt
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.
How to Consolidate Credit Card Debt
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:
- Debt consolidation loan: If you have a decent credit score, you may be able to get a personal debt consolidation loan to pay off your credit cards. This way, you can move your debt from high-interest credit cards to one low-interest loan. Not only does this simplify your monthly payments, it can also save you thousands of dollars in interest over time.
- Balance transfer: Many banks and lenders will allow you to transfer your debt to a different credit card. This is especially useful if you apply for a new card that has an introductory 0% APR, since you will have extra time to pay the debt without accruing any interest.
- Debt management plan: Similar to a loan, a debt management plan allows you to roll more than one credit card payment into one monthly payment with a lower APR.
Frequently Asked Questions About Credit Cards for Seniors
Can a senior get a credit card?
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.
Can a retired person apply for a credit card?
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.
How can seniors get out of credit card debt?
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.
How much debt does the average senior have?
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