Should senior citizens/ retirees in India consider credit cards?

Senior citizens and retirees in India can opt for a credit card, as it can serve as a useful financial tool offering convenience, an added layer of security, and a small but significant emergency buffer. Nonetheless, for optimal utilisation and benefit they need to observe strict financial discipline to avoid any possible debt trap.

1. Cash versus card risk: Carrying a huge amount of cash comes with its own risk and inconvenience. Instead credit cards can be opted as they offer a secure, cashless payment method for everyday expenses, together with online purchases.
2. Cashbacks and savings: Many of the credit cards come with offers such as discounts, direct cashback or reward points on daily expenditure including, grocery, fuel, medical bills etc.
3. Credit line works as an emergency buffer: With the credit line in place, retirees can easily accommodate any delays in pension credits.
4. Credit cards can help in building a credit score in case you are having no debt.

Secured credit cards: Even without a regular income stream such as a salary or other sources of income, senior citizens can get a secured credit card. These cards, secured against a fixed deposit (FD), require no income proof and continue to offer interest income on your FD.

Unsecured credit cards: Taking into account your pension slips that serve as valid proof of income, banks may even offer traditional or unsecured credit cards. Furthermore, card issuers may even issue super-premium cards to retirees if they have high net worth or significant investments- FDs etc. with the bank.

Things senior citizens or retirees need to keep in mind when choosing and using credit cards

Credit limit, fee etc: Senior citizens should choose a card with a credit limit that aligns with their needs and financial situation. Also, go for cards with zero or low annual fee, maintenance cost etc.

Choose cards with reward points that suit your lifestyle: Consider the card with a reward system that goes with your lifestyle. For instance it is better to choose a card with cashback on dining, groceries, utility bill etc.

Clear the total bill in full each month: Instead of the ‘minimum due’ amount, always try and clear the total bill against your credit card each month. This saves you from high-interest burden that can otherwise disrupt your retirement budget.

Seniors at best can maintain a single simple, low-fee card and use it for planned spending such as medical bills, grocery etc, avoiding usage for impulse purchases.