I’ve been studying the credit card industry and writing about it for over 10 years. And while I’m not approaching retirement, I’ve often asked to help retired friends, family members, and readers with their credit cards.
Can you keep your credit cards when you retire?
Some retirees worry that they won’t be able to keep their credit cards once they retire. While understandable, these concerns are unfounded. Once you have a credit card account open and it’s in good standing, the card issuer won’t require information about your income. They’ll also have no idea whether you’re still working.
However, a card issuer can close your account if you fail to make your payments or if you never use your cards at all. So, if keeping a particular credit card is important to you, make sure you use it every now and then.
Can you apply for new credit cards when you’re retired?
It’s another common myth that you must be employed to be approved for a new credit card. In fact, you don’t need a full-time or even a part-time job to open a credit card account. You can report nearly any source of income when you apply for a credit card, including investment proceeds, alimony payments, gifts, trust fund payments, Social Security distributions, and other government benefits.
Also, non-working spouses can report the income of their husbands or wives, as long as the non-working spouses have access to that money to make credit card payments.
What kind of credit card should you have when you’re retired?
When you’re nearing retirement or already retired, you’ll probably have different credit card needs than you did earlier in life. For example, you might be focused on your retirement and be looking for a card with rewards that go straight to your investment accounts. Or you might be seeking to maximize your cash back via rewards programs, earn travel rewards, or eliminate existing balances.
Most retirees I know are also looking for simplicity. Relatives and friends who’ve reached retirement don’t want to get too wrapped up in all of the details of the latest card offers (the way I do). Instead, they tend to prefer cards without complicated terms and conditions and want to rely on one card for most, if not all, purchases.
So, when I’m helping retirees choose the right credit card, I’ll concentrate on their individual needs, but I’ll also keep an eye on cards with straightforward terms (instead of sometimes convoluted reward programs that I might pick for myself).
Best credit cards for wiping out debt
Any financial expert will emphasize the importance of eliminating credit card debt before you retire. Credit cards are unsecured loans, and their interest charges are quite high compared with something like a mortgage. When you’re trying to pay off your credit card debt as quickly as possible, you might need a credit card with a 0% balance transfer offer.
The best 0% intro APR balance transfer offers last at least 15 months. They’ll also have the lowest balance transfer fees (3% or even 0%). Here are my favorite balance transfer credit cards right now.
- Chase Slate®. This card offers 15 months of 0% financing on purchases and balance transfers. But most importantly, there’s no fee for balance transfers completed within 60 days of account opening, and there’s no annual fee.
- Amex EveryDay®. Here’s another card with 15 months of 0% financing on purchases and balance transfers. And like the Chase Slate, it charges no fee for balance transfers completed within 60 days of opening the account. There’s no annual fee, and the card even provides cash back rewards.
- BankAmericard®. This card offers also 15 months of 0% financing on purchases and balance transfers. And there’s no fee for balance transfers completed within 60 days of opening the account. Otherwise, it’s a simple card with no annual fee and no penalty APR.
Best credit cards for retirement savings
Sure, you can put charges on credit cards to earn rewards such as cash back or travel points. However, some cards can directly benefit your retirement. Here are two of my favorites.
- Fidelity Rewards Visa Signature®. This is a simple card that gives you 2% cash back, which can be deposited into a qualifying Fidelity account. On top of that, there’s no annual fee.
- Morgan Stanley Credit Card from American Express. This card offers rewards, including bonus points on many purchases. These points can be redeemed for deposits into your Morgan Stanley account. There’s no annual fee.
Best credit cards to earn cash back
If you don’t have credit card debt, then you might as well earn some rewards from your cards. Here are three of the best (and most simple) cash back credit card offers.
- Alliant Cashback Visa® Signature Credit Card. You’re not going to see celebrity endorsements for this small bank, but it’s home to one of the top cash back cards. This card gives you a generous 3% cash back on all purchases for the first year and a still outstanding 2.5% after that. There’s a $59 annual fee, but that’s waived for the first year.
- Citi® Double Cash Card. This card offers up to 2% cash back on all purchases, with no limits. You earn 1% cash back at the time of purchase and another 1% when you pay your bill. There’s no annual fee.
- AARP® Credit Card from Chase. This is perhaps the only credit card designed for retirees, and it’s a competitive cash back card. You earn 3% cash back at all restaurants and gas stations, and 1% on all other purchases. Plus, for every card purchase you make at restaurants, Chase will donate 10 cents to the AARP Foundation in support of the Drive to End Hunger initiative. There’s no annual fee.
Best credit cards to earn travel rewards
Many of the retirees I know love to travel, but they’re not too interested in deciphering the complex rules of frequent flyer and hotel reward programs. Therefore, I recommend rewards cards that offer rewards that can be redeemed for statement credits. This means that you can just book any flight, hotel, rental car, cruise or tour, and then pay for it with credit card rewards. Here are two cards that let you do just that.
- Barclaycard Arrival® Plus World Elite Mastercard®. This card offers double miles on all purchases, and your miles are worth 1 cent each as statement credits toward any travel you purchase. It also gives you 70,000 points, worth $700 in travel statement credits, after you spend $5,000 within 90 days of opening the account. The $89 annual fee is waived the first year. This card also has no foreign transaction fees.
- Capital One® Venture® Rewards Credit Card. This card offers double miles on all purchases. Miles can be redeemed for statement credits toward travel purchases, but there’s another option. You also can transfer your rewards to miles with 14 different airlines, if you want to go that route. The $95 annual fee is waived the first year.
When you’ve spent decades in the workforce, you’ve earned a relaxing retirement. However, you’ll always need to choose the right cards for your lifestyle and carefully manage your credit card debt.