Financial entertainers such as Dave Ramsey and Suze Orman often berate pre-retirees and retirees for using credit cards. But is it always BAD for seniors to use credit?”


by Debra May

Leveraging other people’s money (aka “credit”) can be a fantastic way to grow your wealth and fund cash-flowing assets. Ask nearly any successful entrepreneur, and they’ll tell you that credit may be one of your best friends when used in a disciplined, thoughtful way.

Unfortunately, Americans live in a debt-based, transactional economy, and many are not financially literate. Less entrepreneurially minded individuals often make the mistake of thinking credit cards are “free money” instead of debt to be paid off as soon as possible. For instance, I’ve encountered many highly-educated people who don’t understand basic concepts such as compound interest. They are shocked when they discover how long it takes to pay off their credit cards when making only minimum monthly payments.

In the first few months of 2022, the typical credit card customer in the US had around $5,769 on their cards. The average interest rate of those cards was 16.27%, with a minimum monthly payment of $222.00.

By taking those numbers and plugging them into Bankrate’s handy calculator, I determined that it would take nearly THREE YEARS to pay off the balance, and you’d have given over $1,300 in interest to the credit card company. If you decided you wanted to pay off that same balance in one year instead of three, you’d need to make a whopping $524 monthly payment! You could probably use that cash for much better purposes, don’t you think?

All this brings me back to whether seniors need to use credit cards once they no longer have a paycheck. Before deciding to ditch your credit cards, add new ones, or pay them off and put them in a drawer for emergencies, you need to spend some time gaining insights into your relationship with money and credit.

No one but you knows your money mindset, not even your trusted financial advisor. And, frankly, a lot of people aren’t honest with themselves when it comes to how they spend their cash. Chances are you learned much of what you know or think you know about personal finance from your family. If you grew up in a financially irresponsible family that spent money as fast as they made it, you might have challenges using credit cards correctly.


If, however, you were raised by parents who saved 99 cents of every dollar they made, forced you to wear hand-me-downs, never took trips, or did anything interesting, you might think you’re entitled to max out every credit card you have so you can enjoy life. Either scenario can skew your beliefs about debt and saving.

The key to a healthy money mindset is balance, but since so many of us grew up with extremes, it’s often hard to achieve that balance and get (and stay) out of debt. Sadly, many people spend their entire lives shackled with massive consumer debt, unable to take family vacations or save enough to retire to nicer communities. You know yourself better than anyone else. So, before you sign up for that “extra miles super points card” offer you got in the mail, ask yourself a few questions:

Do I pay my credit card balances off every month on time? Do I purchase things I genuinely need or things that make me feel better? Am I struggling to make ends meet while trying to give others the impression that I am successful? Do I earn enough from my job or retirement accounts to pay my bills?

Depending on your honest answers to these questions and your current financial situation, you can make sounder credit decisions. You may choose to proceed with carrying your existing credit cards into retirement, replacing those accounts with ones offering better interest rates or more valuable perks, or you could get rid of your plastic altogether.

If you decide to keep your cards or shop around for new ones, there are some things worth considering.

  • Choose cards with no annual fees.
  • Look for more bonuses and reward points if possible.
  • Cash-back on purchases can be a great benefit. Caveat: Watch for strings attached to this feature and read the fine print.
  • If you enjoy travel, you might find low-interest, no-annual-fee cards with special travel perks and rewards.
  • Watch out for “introductory” low-interest rate offers. Be sure you know what the rate adjusts to after the introductory period ends.
  • Always choose cards that offer incentives that fit your needs.
  • Interest rates are generally not a concern if you consistently pay off your balances in full. This means you might look at cards with higher interest rates that offer more valuable rewards.
  • Ask for paper statements instead of digital ones. Studies show consumers are more likely to catch billing errors when they have the paper statement in front of them.

Bottom line: If you are in or near retirement, you don’t want to make the mistake of seeing credit cards as piggy banks. Using credit irresponsibly has consequences that might severely impact your ability to enjoy your retirement. If possible, treat your credit card balance like a utility bill and pay it off monthly.

Credit cards tend to work best for older adults with a steady income, such as full or part-time employment, pensions, investment portfolio dividends, IRAs, or cash-flowing assets. Regardless of your income, having an emergency credit card will help you handle unanticipated expenses such as medical emergencies or home repairs.