Applying for a new credit card before you retire might make sense.
- Your spending habits may change in retirement.
- Your existing credit card bonus program may no longer match your spending.
- It may be easier to get a card approved before you retire.
Leaving the workforce is a major change in every aspect of your life. Once you’ve made the decision to give notice and quit working for good, it may make sense to consider getting a new credit card along with the other modifications you’re making in your financial life.
Here’s why it might be a good idea to apply for a new credit card shortly before you retire.
Your spending habits may change
When you retire, your life is likely to be very different than it was when you were still working. As a result, he is likely to spend his money differently than he did when he still had a job.
It’s possible, for example, that you no longer have a long commute to work, so the amount you were spending on gas could be drastically reduced. However, if he starts taking a lot of plane trips to fulfill his dreams of traveling as a retiree, most of his spending could be in the travel industry.
If your spending habits have changed, the card you’ve been using may no longer have a bonus program that works for you. If your old card gave you extra bonus rewards for buying gas, for example, you might want to switch to a travel card.
The key is to consider what type of spending you’ll do most of as a retiree, and then find a credit card that gives you extra points, miles or cash back for those types of spending.
You may also want to consider what kind of cardholder benefits you’ll take advantage of. If you’re going to be a frequent traveler, access to airline lounges could make your travels a lot more enjoyable, and it might even be worth paying an annual fee for a travel credit card that offers it.
By taking the time to think about your future retirement budget and the lifestyle changes you anticipate making, you can make an informed decision about whether switching credit cards will give you more bang for your buck.
It may be a good idea to apply for a credit card while you are still generating income
If you decide it makes sense to get a new credit card for your modified retirement expenses, it’s a good idea to apply before you leave your job, if you can.
You may be asked about your income during the card application process and the amount you are earning could affect whether you are approved for the card and how large your line of credit will be. If you still have your job, you’ll have a more stable source of income, and probably more retirement income, so it’ll probably be easier to get approved, even for cards with strict approval requirements.
As a retiree, it’s worth taking steps to make every dollar count, since you’ll no longer be getting paychecks. Having the right credit card is an easy way to increase your rewards and take advantage of valuable benefits. It’s worth taking the time to consider whether a new card is right for you.
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