How to pay off debt in retirement
Older Americans, especially those who are retired, should be able to live good lives after decades in the workforce. But are they enjoying life too much? If overuse of credit cards is a barometer, the answer may be an unqualified “yes”.
According to data from the New York Federal Reserve, Americans between the ages of 50 and 70 have $ 376 billion in credit card debt. Compare that to young Americans between the ages of 30 and 50 who have a combined total of $ 348 billion in credit card debt. The New York Fed estimates that total US senior household debt has increased by 543% over the past two decades. So how do you do pay off the debt retired ? There are simple options.
How can seniors get out of debt?
The trick to going back and paying off high credit card debt in your golden years is to recognize the problem, deal with it, and start taking the necessary steps not only to cover the card debt. existing credit, but also to stop using too much plastic.
Seniors (and retirees) can take these steps to overcome their burgeoning credit card debt:
- Acknowledge your credit card debt
- Lock credit cards
- Open a balance transfer credit card
Recognize Your Credit Card Debt: Often times, people don’t realize that a credit card debt problem is getting out of hand.
“If an elderly person pays only the minimum or has multiple credit cards with debt balances, there’s probably a problem, ”said Ashley Morgan, debt and bankruptcy lawyer at Virginia-based Ashley F. Morgan Law. “So it is necessary to break down the debt and get the full picture.”
Gathering all the credit card statements and aggregating the balances and payments can help illustrate the larger problem. “Going through all of the returns together can also help shed light on actual spending patterns,” Morgan said. “It’s easy not to realize that your total debt has increased when smaller increases appear on multiple cards. “
Lock credit cards: Locking in credit cards, except in real emergencies, can also be helpful for seniors struggling with large credit card debt.
“A lot of people think of credit cards as security covers,” Morgan said. “Some people agree to use them regularly and others don’t. If the senior is not someone who can use a credit card and stay on budget, it can help to ask a close, trusted friend or family to keep the card. This way the map is available when needed, but it’s no longer something that is always tempting.
Open a balance transfer credit card: Once a senior cardholder has mastered their stricter credit card spending habits, it’s a good idea to save time with a zero balance transfer credit card.
“A zero balance card with a long 0% interest rate period is a good decision, ”said Kliment Dukovski, credit card specialist at Finder.com. Some zero balance credit cards offer 20 months of an interest-free period, which is enough to give seniors a bit of a break with credit card problems.
TO find multiple zero balance credit card options, visit Credible, where financial consumers can compare credit card offers – and interest rates – instantly.
How To Help Seniors With Credit Card Debt
In many cases, an adult son or daughter, or other family member, may need to intercede with an elderly parent or grandparent with credit card problems. In many cases, an elderly parent or grandparent may not appreciate the help and may not want to engage with a younger family member to solve credit card debt problem.
“Sometimes it can be difficult to get by if a parent or grandparent is older and has reduced mental capacity,” said Anthony Wentzell, Investment Trust and Plan & Act advisor in Windermere, Florida. “Other times, they may not want help, or recognize that there is a problem.
“If the credit card problem is a serious and destructive habit, maybe it is time to ask the senior to add a son or daughter, or even a grandchild, as a financial power of attorney,” Wentzell said. “It gives the child or grandchild the opportunity to sign and act on behalf of their parent or grandparents. “
Consider using an online marketplace like Credible to compare some of the best balance transfer cards side by side and choose the one that suits you.
Credit cards and fixed income can be a toxic mix
It is true that a large portion of the American population has paid off their mortgages and their children are not in college, which means they have more disposable income.
That said, fund managers historically note that older Americans, especially those on fixed incomes, need to be stricter with household spending than younger financial consumers who still earn income and have years to slow down. .
“Seniors are sensitive to consumer debt and especially credit card debt because they have a fixed income,” said Adem Selita, managing director of The Debt Relief Company in New York City. “Most seniors depend on Social Security or retirement income, so an unforeseen expense like a medical bill or a major car repair issue can wreak havoc on their entire budget. “
Credit card debt is a particular concern because credit card debt is only meant to be a short term, revolving loan vehicle. “Average Percentage Credit Card Rates (APRs) are extremely high and if you don’t pay off your balance at the end of the month (which can be difficult to do with a fixed income), a vicious cycle of revolving debt can. result, ”says Selita.