topic Re: Closing all Credit Accounts after Retirement in Personal Finance

Closing all Credit Accounts after Retirement

shadanat — Thu, 25 Feb 2021 03:04:23 GMT

Hi All,

Looking for advice here. My mom is retired and is closing her last credit account. She doesn't feel that she needs it with her being on a fixed income. The last time she used the card was in 2018 when we were on vacation. She doesn't want to accured any debt in her retirement years. She doesn't drive and she doesn't own a home and won't be buying these things in the future. She won't be traveling due to health issues.

Is this a wise move?

EDIT: She has a a checking account with a debit card with the Visa logo

Re: Closing all Credit Accounts after Retirement

IntegerIntrovert — Thu, 25 Feb 2021 03:02:07 GMT

Some services, today and in the future require a card of some type. I wouldn't recommend it.

Re: Closing all Credit Accounts after Retirement

Jnbmom — Thu, 25 Feb 2021 03:22:00 GMT

@shadanat

Although this is a "credit card" forum, I kinda know what you are dealing with. My parents ( my dad was the bill payer), he never and I mean ever had a credit card in his life. He paid cash for everything. when we moved my parents down here all they had was a savings account that he would get money orders from and pay their bills, that's it. I had him open a checking an get a visa debit card( watching him try to use it first couple times at market priceless), but they were older retired and fixed income, had ZERO plans to travel. It worked for them.

If your mother wants to do this and hasn't used a card in 3 years, I don't see anything wrong with it. A lot of our parents grew up in different times and handled money very different .

Re: Closing all Credit Accounts after Retirement

M_Smart007 — Thu, 25 Feb 2021 16:04:07 GMT

I would keep one for emergencies and maybe online ordering. (buyer protection .. possibly)

Just my $0.02's worth.

Re: Closing all Credit Accounts after Retirement

Aim_High — Thu, 25 Feb 2021 17:15:11 GMT

My parents also were credit-averse for most of their lives. In their retirement years, Mom got a couple of credit cards without really understanding credit and went on shopping spree's with dementia and early Alzheimer's. Once I got involved with their affairs, it was one more thing I had to straighten out for them. I mention this because there is a potential risk and burden to family members if credit accounts are kept and used, especially if dementia develops. In the context of the situation, your Mom's decision seems it could be a prudent and considerate move, depending on her overall health, age, and finances.

Ironically, I've been adding credit and improved cards in my latter working years so that I will have great cards and limits in retirement for travel and other spending after my income declines. But this is a good reminder that, at some point, unwinding all those cards and limits might be the wise thing to do.

I agree with @M_Smart007 above, though, that keeping at least one card open might be a good call. Credit cards are just one more tool to have in managing our finances. It's easier to keep an open card than to have to apply for a new one if she needs or wants it again. As long as she is disciplined about the usage and it's not a threat to her budget, keeping a single card open would be little to maintain and would give her options.

Re: Closing all Credit Accounts after Retirement

blindambition — Thu, 25 Feb 2021 17:27:29 GMT

I think it's good to scale down, but I'd keep 2, or 3. There's times that require one, like hotel and car rental. Good to have for travel, some cards protect with medical and emergency situations unforeseen. I'd carry more than one, for any card that might experience fraud.

Re: Closing all Credit Accounts after Retirement

shadanat — Tue, 09 Mar 2021 02:08:39 GMT

Thanks everyone for all your advice. We have decided to close all her credit accounts and she is an authorized user on my card.

Re: Closing all Credit Accounts after Retirement

cakkd — Tue, 09 Mar 2021 13:32:07 GMT

Your mom is a smart lady. If she has an emergency fund, then she'll be fine.

Besides buying a house, you really don't "need" credit. One of my best friends is a millionaire who retired at 40 and never uses credit. Hasn't in decades.

Re: Closing all Credit Accounts after Retirement

disdreamin — Tue, 09 Mar 2021 18:42:12 GMT

@cakkd wrote:
Your mom is a smart lady. If she has an emergency fund, then she'll be fine.

Besides buying a house, you really don't "need" credit. One of my best friends is a millionaire who retired at 40 and never uses credit. Hasn't in decades.

There are so many things that required a credit card, should one wish to travel for example. It isn't necessary for the person to be the account holder though, and the OP idea of AU is a great one. That way there are limits in place and someone actively monitoring the card. For seniors with no one to do that for them, though, I'd say one card for emergencies. I know others will say two due to fraud potential, but if the first card is already for fringe purposes, I'd personally leave it at that.

Re: Closing all Credit Accounts after Retirement

fuzzle — Wed, 10 Mar 2021 01:01:03 GMT

I guess if she is worried about it there is a reason, but usually it's easier even buying groceries with a credit card, and might as well get a few percent cashback

Re: Closing all Credit Accounts after Retirement

Anonymous — Sun, 14 Mar 2021 19:37:07 GMT

I think to do this is to ignore the world we live in, regardless of age.

IMO it's a mistake, and I would also suggest that having a debit card attached to their only source of funds, is a really bad idea. Debit cards don't offer the same protection as credit cards, and the danger of losing all the funds in their bank account is real.

Re: Closing all Credit Accounts after Retirement

Anonymous — Mon, 15 Mar 2021 04:34:44 GMT

@shadanat wrote:
Hi All,

Looking for advice here. My mom is retired and is closing her last credit account. She doesn't feel that she needs it with her being on a fixed income. The last time she used the card was in 2018 when we were on vacation. She doesn't want to accured any debt in her retirement years. She doesn't drive and she doesn't own a home and won't be buying these things in the future. She won't be traveling due to health issues.

Is this a wise move?

EDIT: She has a a checking account with a debit card with the Visa logo

I'm still inclined to keep one on hand with no AF available for emergencies because things happen. After 9/11, Cash is not always King the way that it was in earlier years. 🙏🏻

Re: Closing all Credit Accounts after Retirement

OmarR — Mon, 15 Mar 2021 17:14:52 GMT

@shadanat wrote:
The last time she used the card was in 2018 when we were on vacation. She doesn't want to accrue any debt in her retirement years. a debit card with the Visa logo

I am assuming she used her credit card in (possibly) regards to a hotel, rental car, restaurant, etc., while on vacation in 2018, and than sock drawers it? She sounds like a person who is in control of her finances and should not worry about accruing debt, regardless of having 10 credit cards or one.

Re: Closing all Credit Accounts after Retirement

Anonymous — Wed, 17 Mar 2021 14:46:41 GMT

@Anonymous wrote:
@shadanat wrote:
Hi All,

Looking for advice here. My mom is retired and is closing her last credit account. She doesn't feel that she needs it with her being on a fixed income. The last time she used the card was in 2018 when we were on vacation. She doesn't want to accured any debt in her retirement years. She doesn't drive and she doesn't own a home and won't be buying these things in the future. She won't be traveling due to health issues.

Is this a wise move?

EDIT: She has a a checking account with a debit card with the Visa logo
I'm still inclined to keep one on hand with no AF available for emergencies because things happen. After 9/11, Cash is not always King the way that it was in earlier years. 🙏🏻

Agree. I have cash in my wallet untouched since this pandemic began. I do have a debit card for small purchases but it's not tied to my bank account, for safety's sake.