A report by the Employee Benefit Research Institute found that debt from plastic has risen in recent years among families headed by an individual at least 65.
And why are more seniors using credit cards? U.S. News & World Report says it’s mostly because their generation grew up using the cards and have stuck with them. Unexpected retirement costs, a hike in everyday expenses, and continued debt from years prior have also rendered contemporary seniors more reliant upon credit.
A problem is that many of these seniors depend on Social Security and don’t have much savings. So, when an emergency happens, and it’s hard to get a loan because of limited income, it can seem like a no-brainer to pull out the card.
Managing Credit Card Debt
Seniors can take some steps to help them manage their debt. To wit:
Prioritizing payment. One way to approach debt on multiple credit cards is to pay off the one with the highest interest rate, which could save you money. You can also pay off the credit card with the smallest balance, then use the cash you would’ve plunked down on that card to pay down other higher-balance cards.
Whenever you can afford to send more than the minimum payment, that, too, can help you pay down debt quicker. While finding the funds to make higher payments on a fixed income can be challenging, you don’t want to get behind on your payments and get hit with penalties and maybe an increased interest rate.
Negotiate with creditors. The last thing you want to do is ignore them, although that can be a temptation. In fact, you should contact your credit card issuers to see if they can give you more manageable terms. They might, particularly if you’ve been a longtime customer.
Getting Help For Debt
If you’re looking for credit card debt relief for seniors, you may consider working with a credit counseling agency to help you address your credit card issues. A counselor can help you establish a personalized repayment strategy that considers your age and potentially deal directly with your creditors to solve your debt.
It’s also a good idea to check with a financial advisor before wrestling with your credit card debt. If you’re a homeowner, perhaps you can take out a home equity loan, open a home equity line of credit, or get a reverse mortgage. Maybe you can tap your retirement fund, although that move involves the Internal Revenue Service.
How To Avoid Using Plastic
If you’re worried about mounting credit card debt, it makes sense not to add to it. Therefore, when making a major purchase, you might want to inquire into a layaway plan. Or a small business may be amenable to allowing you to make payments over months. Try to get on payment plans where possible.
Now that you know how seniors can get help with credit card debt, you can make a plan that works for you, then enjoy your golden years in financial peace.