Tips for Helping Your Aging Parent Gain Control of Their Credit Card Debt
For Immediate Release – March 15, 2011
Denver, Colorado
According to a report released in 2009 by the public policy group Demos, average credit card debt among low- and middle-income Americans 65 and older carrying a balance for more than three months reached $10,235, up 26 percent from 2005. It was the fastest increase of any age group.
With older Americans being among the most vulnerable age group in this recession, a majority of them carry debt loads they can barely handle. The Society of Certified Senior Advisors wants to help those seniors who are suffering from debt find a healthy financial balance in life. We’ve created this simple guide that offers tips on how to use credit cards wisely and the warning signs seniors should wary of.
Selecting the right card
If you're like many seniors, you regularly receive offers of credit or charge cards in the mail and at retail stores. How do you know which accounts will be good choices — and which will really cost you?
The Federal Deposit Insurance Corporation (FDIC) and consumer sites such as AARP.org and MyPerfectCreditCard.com offer tips for selecting an account that works for you. In particular, these resources recommend that seniors:
- Select accounts carefully. Be sure to read the fine print about annual fees, interest charges, late fees and payment due dates, as well as any transaction fees.
- Be wary of prepaid cards. Although no interest charges exist with this type of card, most charge activation and transaction fees may add up to more than the cost of a typical credit account.
- Choose the right rewards program. Credit accounts that promise cash back or other rewards or discounts may be attractive, but some charge annual fees or transaction fees, which may reduce the overall value of those benefits. Also, when an account no longer meets your financial needs, don't hang on to it just for the rewards!
- Know what "Zero Interest" really means. If you can't pay a retail card off before the no-interest period expires, you might want to pass on the purchase. Interest charges that are applied after the free period can be high — and they typically go back to the date of purchase.
- Limit the number of cards you hold. The FDIC recommends having no more than three credit cards, using them and paying them off regularly.
- Choose debit for everyday. AARP recommends using credit cards selectively — for large purchases or in times when the final bill isn't available (such as during a hotel stay). Using debit to immediately charge your bank account for everyday purchases may help you avoid the temptation to overspend.
When you do use your credit cards, be sure to pay the entire balance as soon as you are able. And keep an eye on the account to monitor changes such as increases in interest or fees. The Credit Card Accountability Responsibility and Disclosure Act of 2009 protects your right to avoid such changes by closing an account before they take effect. (You do still have to pay the account in full!) Visit the FDIC to see the rules that went into effect in February and in August last year.
In Too Deep?
If you are having trouble paying off your credit card debt, a debt relief counselor can help you manage your outstanding debts, and will help you through some of the paperwork to figure out reasonable payment plans.
The key to getting out of debt is to have a specific plan for paying it off. A recent article form the Senior Citizen Journal suggest taking these steps:
- DESTROY all of your credit cards.
- Make a list of all debts.
- Make a list of all income.
- Make a list of all monthly expenses (without listing credit card debt.)
To print a copy of this article, please visit the Free Resources section of the SCSA website at www.csa.us/freeresources.
The Society of Certified Senior Advisors (SCSA), provides free resources and tools for our members as an ongoing commitment that we have in helping professionals to understand the complex and dynamic lives of modern senior citizens.
About SCSA
SCSA’s mission is to educate professionals to work more effectively with their senior clients. For those who work with seniors, this means understanding the key health, social and financial factors that are important to seniors—and how these factors work together. CSAs are able to integrate this into their professional practices, no matter what field they’re in. They’ve learned how incredibly gratifying it is to help seniors achieve their goals, and the seniors they’ve worked with have learned how important it is to work with someone who truly understands their age-related circumstances. For more information about SCSA and its educational course, please visit www.csa.us.
Contact:
Erica Ananich, SCSA
(888) 538-2599
society@csa.us
www.csa.us/blog
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