Applying for a new credit card in anticipation of retirement 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 job market is a major change in all aspects of your life. Once you’ve made the decision to give notice and stop working for good, it might be a good idea to consider getting a new credit card along with the other changes you’re making to 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 will likely be very different from when you were still working. Therefore, chances are you will spend your money differently than you did when you still had a job.
You may, for example, no longer have long commutes, so the amount you were spending on gas could drop dramatically. However, if you start taking a lot of air travel to fulfill your travel dreams as a retiree, the bulk of your spending could be in the travel industry.
If your spending habits have changed, the card you were using may no longer offer a bonus program that suits you. If your old card gave you extra bonuses for buying gas, for example, you might want to upgrade to a travel card instead.
The key is to consider what kind of expenses you’ll make the most as a retiree, and then look for a credit card that gives you extra points, miles, or cash back for those kinds of expenses.
You may also want to think about the types of cardholder benefits you will enjoy. If you travel often, access to airline lounges could make your trips much more enjoyable, and it might even be worth paying an annual fee for a travel credit card that offers it.
If you take the time to think about your future retirement budget and the lifestyle changes you plan to make, you can make an informed decision 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 earning 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 for one. before actually quit work if you can.
You may be asked about your earnings during the card application process and the amount you earn may affect your approval for the card as well as the size of your line of credit. If you still have your job, you’ll have a more stable source of income — and likely more retirement income — so it’s likely to 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 won’t have any more paychecks. Having the right credit card is an easy way to increase your rewards and enjoy valuable benefits. It’s worth taking the time to determine if a new card is right for you.
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