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Active Retirees : Active Retirees Dec-Jan 2012
Active RetireesTM | 33 FINANCE F rom the mid-1980s to the mid-2000s credit card usage surged. People took advantage of the availability of credit and spent more than they earned. Since the global financial crisis (GFC) this has reversed, with credit card use declining as Australians became more financially conservative. But credit cards are still a major part of people’s financial lives, and despite recent belt-tightening, many are still not using credit cards properly and are finding themselves struggling with debt. Self-funded retirees particularly need to take extra care in using credit cards so that their retirement wealth isn’t gradually eroded by debt. Credit cards can offer more purchasing power and access to online markets, and they can also be convenient options for travelling due to their wide acceptance. It is important though to choose the right card for your needs and be disciplined in its use. “If you are retired, you’re not going to be earning any more money, and you’re going to be living off your investments. Retirees should make sure they track their cash flows properly,” said Neil Salkow, an independent financial planner from Roskow Independent Advisory. “A lot of people can get caught up in the credit card cycle and keep spending and spending and getting more into debt.” Credit cards Choosing a card can be confusing. There are 270 different cards from 67 different brands available in Australia, including cards with reward programs, low interest, interest-free periods, no annual fee, and special deals for transferring balances from other banks’ credit cards. “There are a lot of different styles out there,” said Peter Arnold, a financial analyst for credit ratings agency Canstar Cannex. “So there is a credit card to suit most needs, as long as the user can make repayments on their debt.” Choosing a credit card that maximises the potential advantages, such as greater purchasing power and convenience, requires more than just picking the most popular card. You need to tailor your choice to your needs. “Simply identify how you will use the card,” Arnold says. “For example, will you be able to pay off your debt every time and on time? If so, you don’t have to be as concerned with the interest rate, instead look at the annual fee on the card as this can be quite high sometimes.” Arnold said to make sure you are not paying unnecessary annual fees. “There are lots of cards out there that don’t have annual fees now,” he said. “BankWest is a good example. If you’re using it for heavy spending, » Despite recent belt-tightening, many are still not using credit cards properly and are finding themselves struggling with debt.
Active Retirees Oct-Nov
Active Retirees Feb-March 2012