Tips for Retirees Choosing a Credit Card

When it comes to credit cards, there are a multitude of choices out there—each offering different rewards and benefits to users. In fact, there are so many cards that it may be a little overwhelming deciding which card is the right one for you to carry. We won’t get into specific cards here, but let’s explore some of the things cards are offering these days and which of these benefits might give someone who is nearing retirement or recently retired the most bang for their plastic buck.

Without a traditional salary coming in, there’s a good chance your spending habits might change a little after retirement. There are certain things you know you will still have to pay for—like home maintenance, insurance, healthcare, and day-to-day living expenses. You may also have more time for things like travel, entertainment, and hobbies. Identifying your spending habits and setting a budget for these things are good first steps to choosing the card that’s right for you.

From there, here are some essential features you’ll want to look for in every card that would be considered retiree-friendly:

1. Low or No Annual Fees: You want to ultimately get something back from your card, so make sure your benefits are not being outweighed by fees every year. Some cards, such as the CommercePremier Visa Signature^® Credit Card, have no annual fee at all.

2. Favorable Interest Rates: Carrying debt into retirement is rarely a great idea. If you do have to carry a balance for some reason, is the interest going to pile up?

3. A Generous Rewards Program: You want something that is going to give you the most relevant benefits based on the things you use the card for most often.

4. Travel Benefits and Insurance Coverage: With more time for travel, it’s great to have a card that provides discounts, an easy path to free flights and hotel stays, or insurance coverage on a rental car or trip that unexpectedly is cut short.

5. Fraud Protection and Security Features: Fraudulent charges, stolen card numbers, and identity theft are increasingly common.

6. Accessibility and Customer Service: If you have a question or something goes wrong, everyone wants to talk to a person and not a machine.

Cash Back vs Points: Which way to go?

After weighing some of the broader features of a card, you may then start to look closer at reward structures and specific benefits. Some of the biggest perks cards offer is either cash back or points that can be turned around and used to purchase things. If you are using your cash back card for everyday purchases, paying off the balance monthly, and can secure a card with a low (or no) annual fee, that may help you come out ahead. If you don’t use the card frequently and the card has a fairly high annual fee, the cash back you’re getting on every purchase is probably not a good deal.

If you’re using a card that gives you point rewards, make sure the points will actually add up fast enough that you can use them for something of value. Some cash back or point-driven cards may also give you more points for purchases in specific categories, but maybe not as many for purchases outside of those categories.

Let your lifestyle lead the way.

There are also some cards that cater specifically to your lifestyle. If you are recently retired and active, you may be going out for more meals, traveling more frequently, or attending more events than you have in the past. In these cases, you may be best off with a card that gives you more rewards and perks for spending money in those categories. Airline or hotel-specific cards may earn you points on everyday purchases, but 2 or 3 times the points when you’re using it to buy their plane tickets or stay in their hotels. If you’re an avid concert or theater goer, you may rack up points faster to use toward more events with certain cards. Or if you eat out frequently, the dining rewards with some cards will add up to more discounts or free meals. Depending on your lifestyle, this can all add up to big savings.

Getting benefits right from the beginning.

Another thing to consider is sign-up bonuses or introductory offers. Let’s say you’ve always wanted to go to Hawaii. You may find a travel-based card that gives you 20,000 points just for signing up. Those points can be turned around and used for plane tickets or hotel rooms. Or maybe you want to make a big purchase like a hot tub or a boat. The cash back on a purchase like that could really be significant with the right card—and it’s something you were going to buy anyway.

Finally, a few other things retirees might consider when choosing a card:

1. Tax Treatment of Rewards: Rewards such as cash back, points, or miles are not generally considered taxable income, but there may be cases where rewards used for cash back or statement credit might be. Consult your tax professional to make sure.

2. Tax Deductibility of Interest: Interest paid on credit cards is not tax deductible, and carrying a high balance on a card could lead to financial strain for retirees.

3. Impact on Credit Score: Using credit cards responsibly is a great way to maintain or increase your credit score, which could lead to lower interest rates or better terms if you ever want to apply for a loan or credit.

4. Fraud Protection: This was briefly mentioned earlier. Retirees are frequently targeted for scams and fraud (as are all consumers). As a CommercePremier member, you have access to a complimentary Commerce ID Recover subscription to safeguard your identity OR a reduced-price subscription for Commerce ID Monitor.^1,2 Contact your Premier Banker for details.

5. Budgeting and Tracking Expenses: Using a credit card responsibly for everyday purchases is a great way to track expenses and budget effectively. Some cards even come with tools that can make it easier to monitor spending, which could help you save money and better understand how your spend by category.

Most importantly, do your research and carefully consider all the benefits a card offers and determine what works best with your spending and lifestyle. If you’re not sure where to start, Jaclyn Dinkel, Senior Manager of Product Management – Consumer Lending suggests, “It may be worth having a conversation with your Premier Banker as to what you’re wanting in a credit card.” They can sit down with you, look at your spending habits, help weigh the benefits that are most important to you, and point you in the right direction.