What's the Best Credit Card for Retirees?

Source: MarketWatch:

“What’s in your wallet, old man?”

Although retirees are bombarded with ads about walk-in tubs, reverse mortgages and river cruises, most of the millions of dollars spent on credit card ads seem focused on younger individuals. Hey, one day Tina Fey will be old, too!

It’s probably only a matter of time before someone comes out with a specific credit card for retirees, seniors and older Americans. After all, they’re not that different from the younger, credit-burdened population.

According to the National Center for Policy Analysis (NCPA), a nonprofit, nonpartisan public policy research organization based in Dallas, seniors are taking on more credit card debt since 1989. A recent USA Today article, points out that the “average credit card balance for 65- to 74-year-olds in 2010 was $6,000, compared with just $2,100 in 1989, and for those age 75 and older, the average balance was not even measurable in 1989, but had ballooned to $4,600 by 2010.

This article is not about taking on more debt for retirees and seniors. In fact, if you’re retired or older, you need to ensure that your levels of debt are as low as possible.

But if you’re going to use a credit card, are the credit card needs of retirees and seniors different from others?

Try this: The next time you’re out with a friend and they use their credit card, ask them why they have that credit card.

For most people, the answer may be that they have no specific reason and they have “so many” points built up that they don’t even know what to do with them. For others, there are specific reasons for choosing their credit card and many are “fanatical” about the gathering of points and rewards.

Many retirees incorporate the rewards from their credit cards into their retirement plans. For instance, during their later years of working or when one spouse is working, many accumulate as many points or rewards as possible to use in their retirement for things like travel, hotel stays, and even using their points for items that they will use in the future rather than using their retirement income to buy these items.

Many like the cash-back features to help them to make ends meet or just to use on special purchases that they wouldn’t allow themselves to make using their retirement income.

John Ganotis of CreditCardInsider.com feels that retirees and seniors gravitate primarily toward cash back and travel cards.

“Cash-back has been a popular choice for seniors. They also like to travel in retirement. Collecting miles to visit their grandchildren and travel is also an important consideration,” Ganotis says.

He also notes that in addition to rewards, customer service and fraud protection are important factors for older Americans. “Identity theft and avoiding phone scams is a big concern for many seniors,” Ganotis says.

The reality is also that costs for health care and goods continue to grow for retirees. This may necessitate the taking on of more credit by retirees for these items. Ganotis expressed his belief that he wouldn’t be surprised if the credit card companies begin to explore specific ways and programs to help retirees and seniors with these costs.

Ganotis notes that he’s seeing some cards experiment with programs to help with health care and even long-term care costs. He also notes that some cards have incorporated saving programs into their cash reward programs, including some specifically for their retirement accounts as well.

So go ahead and ask another retiree or older American what’s in their wallet.

You may find that your decision regarding a credit card should be another part of your retirement plan.