Best credit cards for over-50s

By Emma Lunn

The right credit card can help you build credit and earn rewards throughout life. But recent research shows that those over age 50 are making some poor judgment calls at a time when retirement -- and, perhaps reduced income -- are on the horizon.

Here are some of the mistakes over-50s are making -- and some cards they can use to remedy them.

Bad credit choices
April 2013 research by Saga, a company that offers financial products to over-50s, shows that, while more than 6 million over-50s have a credit card, their credit choices could be causing them to miss out on the best deals.

A third of credit card users in this age group simply take out a credit card with their bank rather than shopping around for a card that better suits their needs,  and a quarter of over-50s pick a card for the freebies alone. credit-card-choices

Only a small number of those questioned say they pick a card for money saving reasons -- just 6% say they choose a card because of the introductory 0% interest rate. However more than a third of those who have gone for 0% introductory offers say they have forgotten to switch cards when the 0% period ended and have gotten hit with interest charges as a result.

"Freebies can be enticing, but people should look beyond air miles, vouchers and reward points when they pick a credit card," said Roger Ramsden, chief executive of Saga Services, in a news release. "People should pick an all-round good card that has a low standard interest rate that won't turn round and bite them if they don't pay their monthly bill in full."

Better credit card choices
Saga does offer a credit card focused on over-50s -- the Saga Platinum credit card, which offers 0% on purchases and balance transfers for the first nine months after card opening. The card's APR is 11.9%.

However, over-50s looking for the best credit card deal might want to sidestep Saga and look around elsewhere.

"Just because Saga caters for the over-50s market doesn't necessarily mean that they offer the best card for this age group," says Andrew Hagger, personal finance commentator at MoneyComms, "It's not a bad card overall with 11.9% APR representative, and 0% surcharge on overseas transactions, but it doesn't offer rewards, and the 0% deals for nine months on purchases and balance transfers aren't that generous when you look at the wider market."

So what does the wider market offer? With the possibility of retirement edging closer, over-50s will want to look for cards that give them more time to pay balances off in the absence of a regular paycheque, as well as cards that let them travel more affordably.

"The key is to consider what the main things you want from a credit card are," Hagger says. "Often it may mean carrying more than one piece of plastic and using each to its strengths."

Flexibility for paying off balances: Cards that offer 0% on purchases for a set period of time allow you to spread out the cost of an otherwise unaffordable purchase -- over more than a year in some cases. This can come in useful if you're saving aggressively for retirement (and don't want interest charges to dilute your savings), or if you've already retired and need to pay for a large unexpected expense. There are several cards that offer 0% on purchases for long time periods; Halifax offers 17 months, Tesco offers 16 months and Barclaycard offers 14 months.

Flexibility for dealing with debt: If you've charged too much on another card and don't have the cash coming in to pay it off, a balance transfer card offering a 0% introductory deal can curtail the interest damage and let you dig yourself out of debt more quickly. Balance transfer deals currently on the market offer upwards of two years interest free on the amount transferred from another card. Barclaycard leads the pack at 26 months, but Halifax and Tesco aren't far behind at 25 months. Even after factoring in the balance transfer fee, interest savings can help you come out ahead, assuming you pay off the debt in full by the end of the 0% period.

Low interest rate: If you need a card just for emergencies, concentrate on getting a card with a low interest rate. According to the Bank of England, the average APR on credit cards is around 17%, but if you have good credit, Sainsbury's Bank offers an interest rate of as low as 7.8% on its Low Rate card, and the BarclayCard Platinum Simplicity offers 7.9%

Low costs for travellers: Saga's card is one of the few credit cards on the market that doesn't charge extra for use overseas -- so it's a good option for those who want to spend their pension years travelling. Another card that doesn't charge for use abroad is the Post Office MasterCard.

See related: Credit card debt weighs heavily on pensioners, Many over-50s plan to spend more on Christmas

Published: 3 May 2013