Are You a Retiree With Credit Card Debt? Here's How to Pay It Off
by Maurie Backman | Published on Aug. 23, 2021
Credit debt is bad news at any age. Here's how to eliminate yours.
Credit card debt can be damaging. When you rack up a balance on a credit card that you pay off over time, you accrue interest on it. That costs you more. And too much credit card debt can damage your credit score, making it more difficult to borrow money affordably when you need to.
It's easy to think of credit card debt as a younger cardholder's problem. But plenty of older Americans have credit card balances too. And that seems to have escalated in recent years. In 2001, only 24.2% of senior households held credit card balances, according to the National Council on Aging. By 2016, more than 34.2% of seniors did.
If you're a retiree with credit card debt, it's imperative to rid yourself of it as soon as possible. Here's how.
1. Get on a budget
Following a budget helps you manage your money more effectively. It also helps you carve out more money to pay off your debt.
To set up a budget, go through your bank account and credit card statements from the past year. Figure out what your expenses really cost. Then adjust your spending in categories that are variable to free up cash to knock out your credit card balance.
2. Consider working part-time
Many retirees live on fixed incomes. You may have a pension from your former employer or receive Social Security payments and IRA withdrawals. If your income isn't enough to pay off your credit card debt, then you may need to work part-time and use your earnings to get rid of your balance.
That work doesn't have to be boring or lock you into a rigid schedule. If you're computer-savvy and have the right skills, look into jobs you can do from home, like data entry or content editing. Or if you're good with kids, you might see about providing after-school care for a family. There are often many options based on your skills, schedule, and comfort level.
3. Use windfalls to chip away at your balance
You may come into extra money during the year, whether it's a tax refund or another lump sum. Rather than spend it, use it to pay down whatever balance you have.
Credit card debt is best avoided no matter what stage of life you're in. If you're a retiree with credit card debt, pay it off as quickly as you can, and enjoy your senior years without that financial stress. Remember, too, that if you don't pay off your credit card debt in your lifetime, that money comes out of the estate you leave to your heirs. If you'd rather not burden them, do your best to get rid of that debt.
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