Don’t Make This Credit Card Mistake Before Retirement – Technologist

Are you considering retirement soon? Congratulations!

You probably have a checklist of things you’re trying to accomplish before that day of celebration.

There are many important financial items to consider, such as:

  • How much money do you need to retire?
  • Retirement rule changes you need to know
  • When is the best time to collect social security?

Lots of I’s to dot and T’s to cross, for sure.

But don’t let your credit card situation go unevaluated before you leave your job for the final time.

Retirees will tell you that getting approved for a rewards credit card while you’re not working can be tricky.

Money expert Clark Howard often gets questions about retirement, and he recently received one about how to handle personal credit cards. In this article, we’ll look at his response and give some helpful tips on preparing this piece of your retirement puzzle.


Ask Clark: Will It Be Hard To Get a New Credit Card After Retiring?

During a recent episode of The Clark Howard Podcast, Clark was posed a credit card question by a soon-to-be retiree who is concerned about access to credit cards in the future.

Scott in Nevada writes:

“We are planning to retire in the next year. We have several credit cards, which we always pay off. Occasionally we have signed up for a new travel related card to receive some generous bonus points or miles. While we don’t need any more cards, will it be hard to get a new card after we retire? Our income will be modest, although we have no debt and enough savings to be fine. We are just wondering if we should sign up for one or two extra cards, while we can, since we may want to cancel some that we have now. Thank you for all you do for so many of us!”

Clark responds:

Yes, yes! And this bears repeating. I’m glad you brought this question up, because this came up recently with someone else who retired with quite a bit of assets. And they couldn’t get a card again!

The way credit card companies base things: They don’t know what assets you have, so they ask you for your income. You don’t want to lie about that income. And so it’s important that — before you retire — you think through your strategies.

Clark says many retirees will be heavy on assets and light on income, so they’re facing the same predicament. That’s why pre-retirement is the time to have some aspirational discussions and do some credit card soul searching.

“Say, ‘Hey, I’d really like to have this reward card or I’d like to have that cash back card’ or whatever. And get them before you retire.

Because once you retire, you may — like in this situation — have lots of money saved and no debt. But, at the same time, [credit card issuers] see you’re facing a much lower ongoing reportable income in retirement. That’s why you got the cards before you retire.”


Which Credit Cards Should You Consider Before Retirement?

If you’re in a similar position as Scott and are looking to take Clark’s advice on snagging a new credit card or two before you retire, you’re probably wondering: Which cards are the right choice?

To get this conversation started, let’s first make sure you’re currently following Clark’s rules for using credit cards.

Within those rules are some key takeaways you’ll want to ensure you’re in line with for retirement:

  • Make sure you have at least two credit cards from at least two different card issuers (ex. Chase, Citi, Discover, etc.)
  • If you’re going to carry a balance in retirement, you’ll want the lowest APR possible for that balance. Credit cards with low, fixed APRs are often found at local credit unions.
  • Having at least one no-annual-fee cash back credit card that awards unlimited 2% on all purchases will ensure that you effectively pay no more than 98 cents on each dollar you spend in retirement (as long as you pay your balance in full).

If you feel comfortable with your positioning on all three of those points, you may be a candidate for either a travel rewards card with a lucrative welcome bonus or a card that will reward you 3% or more on spending categories you use most often.

I also have a compilation of some of the best credit cards for retirees that you may want to consider.


Are you already retired? Do you have some tips for people who are planning to join you? We’d love to hear your thoughts in the Clark.com community.

The post Don’t Make This Credit Card Mistake Before Retirement appeared first on Clark Howard.

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