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                              Credit Card Debt in Retirement

The goal of all retirees should be to pay off all consumer and mortgage debts before retirement, including credit card debt. State retirees might elect to continue using credit cards each month for convenience and safety but the wise thing to do is pay off the balance each month. It makes little sense to pay 15-20 percent interest on a credit card balance when savings and investment earnings is probably much less. If you are faced with a credit card balance, shop for the lowest interest rate that meets your credit needs, and consider making adjustments to lower your routine spending patterns and use the savings to pay off the credit card balance.

Did you know that federal consumer credit laws protect retirees? Retirees can and should shop for the best credit deal, plus federal law requires the lending institution disclose the following information to a retiree so that you can compare rates.

1. Amount finances
2. Total number of payments and their amounts.
3. A description of any security held by the creditor.
4. Annual percentage rate (APR) expressed as a percentage which reflects all of the cost of the loan.
5. Finance charge stated as a dollar amount.
6. Other loan terms and conditions such as date on which payments are due, late payment and pre-payment penalties.

In addition, federal law regulates advertising of credit terms, prohibits credit card issuers from sending unrequested cards, limit’s a cardholder’s liability to $50 for unauthorized use of their card, and requires written itemization of the amount borrowed and all charges not included as a part of the finance charge.
All finance companies, stores, banks, credit unions or credit card companies are required to disclose this information so that a state retiree can shop around for the best credit deal.

The Equal Credit Opportunity Act prohibits discrimination against an applicant for credit on the basis of sex, martial status, race, color, religion, national origin, age or income from public assistance. This act does not give you an automatic right to credit, but it does require that creditors apply the same standards of credit-worthiness to all applicants.

Originally published  June 6, 2007

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