Retirement and Credit Card Debt

Information verified correct on October 22nd, 2016
Credit Cards & Retirement

How you can avoid credit card debt ruining your golden years.

Credit cards provide us with a convenient source of finance during our working lives, but it’s important to get credit card debt under control when you approaching retirement.
While you might have gotten by paying minimum balances during your working years, the accruing interest will be harder to manage when your income is lower and unlikely to increase.

The first thing you need to do before retiring: pay off your credit card debts

Credit card debt is any unpaid balances that are owing on your card. It’s important to understand why you have credit card debt to avoid making the same mistakes again in the future. This is especially important if you plan to keep using your credit cards during retirement.

Understanding why you have so much credit card debt?

  • Blowing off your budget. While credit cards give you access to additional funds, it doesn’t mean you should spend more than what you can afford. Try and set a spending limit in place and even reduce your credit limit to keep your debt in check.
  • Having too many cards. Not only does this give you access to more money, but you’ll also be paying more fees and interest. Having too many cards also makes your repayments difficult to manage, which can see you fall into the debt trap.
  • Only making the minimum monthly repayments. Making the minimum monthly repayments can see you paying off your debt for a long time, and accruing considerable interest in the meantime. Look at paying over the minimum payment if you want to make any kind of dent in your balance.

How to get rid of credit card debt before or after retirement

  • Paying on time. One of the effective ways to reduce debts is to ensure that you pay on time, as this will avoid late fees and see you better managing your debts.
  • Exceed the minimum monthly payment. You can reduce your debts by paying more than the required payment per month. This will lower the debts on the long run.
  • Stop using your credit cards. Credit cards only make a retiree incur more debts. As a way to reduce these debts, you should avoid them and instead, start paying using debit card or cash.
  • Make additional repayments. If you find you have a bit of extra cash, put it towards your debt.
  • Have goals. You should have objectives that will help you maintain your financial progress. Having realistic and attainable goals will help you wade off the debt burden.

The action plan: Strategies to pay down your credit card debt

There are a few strategies that you can adopt to pay down your credit card debt before you reach retirement.

  • Pay high-interest debts first. One of the biggest contributors to growing debt is the accruing interest you’re charged. Higher interest means this interest will accrue faster, so by paying off these debts first you can save yourself money. Once you pay these debts off you can move onto debts that have lower interest.
  • Consider a balance transfer. If you’re struggling with repayments, you could consider doing a balance transfer. This lets you bring your existing debt over to a new card and pay 0% p.a. interest for a certain period of time. This can give you time to pay down your debt without paying interest.
  • Pay off your smallest balance first. This method is also known as the ‘snowball method’ and sees you paying off your smallest credit card balance first, regardless of what interest you’re paid on your each card, the fees you pay, etc. This method can see you gain confidence in paying off your debt and also help you save on fees by closing your card once you’ve paid off your balance.

10 Tips to Reducing your Credit Card Debt

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Do you need to consolidate your credit card debts?

It is always advisable to control your spending habits or else you will find yourself in serious debts that you will need to pay. If you do find yourself in this situation, one option you have is to consolidate your debts. This will help in reducing your debts in the long run. Consolidating your debts offers the following benefits:

  • Reduced interest rates. A balance transfer credit card can offer you 0% p.a. on balances transferred, and you can also take advantage of consolidating your debts to a card or loan with a lower rate than you currently have.
  • Better budgeting. By having a single debt to worry about you can better budget for your repayments, and you may even find that you are better able to make additional repayments. You can alternatively tackle the budgeting head-on yourself via the Pocketbook app.
  • Easy to manage. Consolidating your debts means you only have to worry about one monthly repayment for a single loan, rather than several repayments for separate loans.

Compare Debt Consolidation loans:

Rates last updated October 22nd, 2016
Fox Symes Debt Solutions
Consolidate your debt with a Fox Symes Debt Consolidation Solution. Fox Symes may be able to assist you to get back in control of your finances and start to reduce your debt whether it be your mortgage repayments, credit card, personal loan.
Go to site More

Learn more about debt consolidation

Moving on from a credit card to the benefits of a debit card

Credit cards invite more expenses and thus more debts, but debit cards ensure that you only use what you have. Doing away with credit cards can help retirees reduce debts while still having convenient access to their money. It will also limit them to spending, as they will only spend what they have. Many individuals have adapted to spending more than they have, and they find it so difficult to return to effectively manage their finances.

Comparing the costs of debit cards to credit cards can earn you substantial savings in the long term, furthermore it still provides you with the flexibility to make your Visa and Mastercard purchases without the temptation of blowing your budget.

Rates last updated October 22nd, 2016
Monthly Account Fee Debit Card Access ATM Withdrawal Fee Fee Free Deposit p.m. Details
Bankwest Easy Transaction Account
Pay no ATM fees at over 10,000 ATMs in Australia (conditions apply).
Mastercard $0 $2,000 Minimum deposit of $2,000 per month needed to waive the monthly account fee otherwise $6 monthly fee applies. No ATM fee applicable at Bankwest, CBA, NAB, ANZ, Westpac, St.George, BoM and BankSA ATMs in Australia. Open More
NAB Classic Banking
Tap and Pay with your Android Phone using NAB Pay.
No minimum deposit required.
Visa $0 $0 No monthly account fees, ever. Free use at over 3,400 NAB and RediATMs Australia wide and $0 overdrawn fees. Open More
HSBC Day to Day Transaction Account
Your Visa debit card unlocks special privileges worldwide with the HSBC home&Away Privilege Program.
Visa $0 $0 $0 monthly fees. No ATM fees at over 3,000 HSBC, Westpac, St.George, Bank of Melbourne and BankSA ATMs. Open More
ANZ Access Advantage
Apple Pay now available.
Unlimited transactions at ANZ ATMs, EFTPOS, Internet, Mobile and Phone Banking.
Visa $0 $2,000 No monthly account fee when you deposit at least $2,000 per month. Other fee waivers available based on your personal situation. Open More
Bankwest Qantas Transaction Account
Earn Qantas Points on eligible purchases and on your account balance.
Conditions apply.
Mastercard $0 $2,000 No monthly fees when you deposit at least $2,000 into your account each month. Free access to Bankwest and CommBank ATMs in Australia. No overseas ATM withdrawal fees (charged by Bankwest) though third party fees may apply. Open More
Westpac Choice
$0 ATM withdrawal fee at 50,000+ ATMs globally.
Via Westpac's Global ATM Alliance. Get Cash without your debit card (conditions apply).
Mastercard $0 $2,000 No ATM fees when using St.George, Westpac, BankSA or Bank of Melbourne ATMs in Australia. Deposit at least $2,000 per month and enjoy no monthly service fee. Open More
BankSA Complete Freedom Account
Open one in less than 5 minutes with Cardless Cash available.
Visa $0 $2,000 No monthly account keeping fees when you deposit at least $2,000 in the account each month. Free access to BankSA, St.George, Westpac and Bank of Melbourne ATMs. Open More
Bank of Melbourne Complete Freedom
Get Cardless cash and shop securely with your Visa debit card. Customise SMS and email alerts.
Visa $0 $2,000 No ATM fees when you use Bank of Melbourne, BankSA, St.George or Westpac ATMs. No monthly fees when you deposit at least $2000 into this account each month. Open More
St.George Complete Freedom Account
10% Cash back for online gaming purchases.
Waived account keeping fees when minimum deposit is met with no minimum balance.
Visa $0 $2,000 No account keeping fees, if you deposit $2,000 per month plus no minimum balance required. No ATM fees when using St.George, Westpac and BankSA ATMs. Open More
BankSA Express Freedom Account
Get Cardless Cash, free SMS and email alerts.
Visa $0 $1,000 Avoid ATM fees when using BankSA, St.George, Bank of Melbourne and Westpac ATMs. Avoid the monthly fee if you deposit $1000 into this account each month. Open More
Bank of Melbourne Express Freedom
Get Cardless Cash and PAYG branch and cheque services.
Visa $0 $1,000 No ATM fees when you use Bank of Melbourne, St.George, Westpac and BankSA ATMs. No monthly fees if you deposit $1000 into your account each month. Open More
Learn more about debit cards

It is important for retired people to have appropriate debt management skills so that they can have a debt-free retirement. When you retire without debts, you will be able to focus on other things, such as leisure activities, rather than looking for debt solutions. As you near your retirement, you should aim to pay off your credit card debts, to make the most out of retirement.

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Credit Cards Comparison

Rates last updated October 22nd, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on purchases and balance transfers for 15 months. This card also comes with a low annual fee.
0% p.a. for 15 months (reverts to 13.99% p.a.) 0% p.a. for 15 months with a one off 3% balance transfer fee $59 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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