Author Topic: Credit cards and limits in retirement  (Read 1392 times)

Wanttobehome

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Credit cards and limits in retirement
« on: June 22, 2020, 10:51:10 AM »
Hi

I am planning on retiring in three years and I am looking at my credit cards and the spending limit.

The ones I have are for cash back, so I use them and pay off the balance monthly.

I was think of streamlining the number of cards I have, from a security point of view.

What level of credit did you keep on your cards going into retirement 1 x annual costs or more?

Is there anything else I need to consider when keeping/cancelling my credit cards

JLee

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Re: Credit cards and limits in retirement
« Reply #1 on: June 22, 2020, 10:54:14 AM »
By "security point of view," what do you mean?

Wanttobehome

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Re: Credit cards and limits in retirement
« Reply #2 on: June 22, 2020, 10:58:27 AM »
By "security point of view," what do you mean?

Risk of Fraud - would reducing the number reduce the risk, especially when there is  a lot of available credit?

JLee

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Re: Credit cards and limits in retirement
« Reply #3 on: June 22, 2020, 11:03:52 AM »
By "security point of view," what do you mean?

Risk of Fraud - would reducing the number reduce the risk, especially when there is  a lot of available credit?

You are not liable for fraudulent charges on any credit cards - I'm not sure I see the advantage of closing credit lines, as it would likely decrease your credit score in the process.

nereo

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Re: Credit cards and limits in retirement
« Reply #4 on: June 22, 2020, 11:12:26 AM »
as JLee said, you are not liable for fraudulent charges. 

It's good that you are concerned about risk of fraud.  IMO a much more effective strategy would be to
1) place a credit freeze, preventing would-be thieves from opening accounts in your name
2) monitor your existing credit cards at least monthly
3) use a credit monitoring service to check for hard pulls and erroneous info on your reports (some services are 'free', such as Credit Karma)

Beyond that, keep at least one credit account that is >5 years old to avoid negatively impacting your credit score.  If it is easier for you from a management standpoint, cancel newer cards or ones you don't really need.  How MUCH credit you need varies substantially from person to person, but I haven't found much use for limits above what you would normally spend in a month + ~$10k.  For any really big purchases, vendors are used to splitting them up into multiple payments over several months, because very few people can actually pay them in one lump sum.  And if you are mustachian you will be paying off the balance each month regardless.

One advantage of canceling cards you rarely use is that your primary CCs will be more willing to raise your limit.  One of the biggest things they look at is your total available credit.

GizmoTX

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Re: Credit cards and limits in retirement
« Reply #5 on: June 23, 2020, 01:02:49 PM »
Nereo is spot on. We do it all.

Make sure you have at least 2 cards from different banks -- any bank can cancel you at any time.

If you are/will be traveling internationally, make sure that at least 1, preferably 2, cards do not charge foreign transaction fees.

We use 1 CC for online purchases, another for trusted vendors, especially for recurring charges. If you or your bank cancels & replaces a card because of fraudulent use or access, it makes notifying the recurring charge vendors easier.

Use the time before you retire to open any additional cards if you have the above gaps. Then close any you know you won't use.

Mr. Green

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Re: Credit cards and limits in retirement
« Reply #6 on: June 23, 2020, 04:36:43 PM »
Don't be surprised if tour credit limits need to be reduced. My wife and I retired with probably $150k in available credit across all cards and our income is now less than 20% what it was when we were working. 800+ credit scores and the last aChase cards my wife applied for was declined because our credit limit was already high enough for our income profile. We could probably fix this by reducing the limit on older cards we don't use because they aren't good for churning.

Wanttobehome

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Re: Credit cards and limits in retirement
« Reply #7 on: July 02, 2020, 10:26:48 AM »
Thanks all for your replies, my plan will be
Continue to check balances monthly
Continue to check credit karma
I will look into credit freeze
Maintain 3 x cards - longest highest limits
I see I am not liable, but its a pain to claim back
I also need to use the cards to keep them active - pay off balance at end of month so pay no interest