How Your Credit Score Can Affect Your Retirement

Most people strive to have a solid credit score in the upper 700s or low 800s most of their adult life. However, not everyone worries about his or her credit score come retirement. By the time most people retire, they have moved beyond the constant worry of everything being perfectly on time due to the misconception that credit scores do not matter after retirement. The truth is that credit scores are an imperative part of life from the time credit is started until the day we pass on. Here are a few examples of times where a good credit score will have benefits to you after retirement.

Credit Cards

Credit cards come in many different shapes and sizes, figuratively speaking. There are rewards cards, bonus cards, higher interest rate cards, lower interest rate cards, and many different variances in between. If you want to be able to apply for and use credit later in life, you need to start with a good credit rating. The higher your credit score, the lower your interest rates will be on your credit cards, and the more bonuses you will have access to. If you have very few credit cards prior to retirement, but you want to apply for more after you retire, you will need to have solid credit in order to make that happen. Credit card companies are more leery about giving credit to older individuals, as they are closer to passing away and not being able to repay their debts. Showing a solid history of paying your bills on time will go a long way when it comes to convincing a credit card company that you are worth the risk.

Buying a New Car

There will come a time when the car you are currently driving will need repairs. Some of those repairs may end up costing you more than the car is worth, making the purchase of a new car a sound decision. When this happens, you will want the lowest interest rate possible so that you don’t end up spending twice what the car is worth. Installment loans, like car loans, are more difficult to get when you are older, especially when you have less than perfect credit. The better your credit score is when you apply, the better offer you will get for the car you want or need.

Most Types of Insurance

There are many different types of insurance that require good credit to keep the costs down. You will end up paying higher premiums if you have bad credit for many types of life insurance, car insurance, homeowners insurance, and even renters insurance if you do not own your own home. The best way to keep the premiums at a minimal price is to have a long-standing history of on-time payments for all of your bills and utilities. Most lenders will also look at the fact if you have had other installment loans in your history, such as mortgage payments, to determine if you are worth the risk of lending to as well. The more on-time payments you have in your history, the more likely you are to be able to get the insurance you need at a price you can afford.

No matter what you end up needing to buy after you retire, the better credit you have, the less it will end up costing you in the long run. It is worth taking the time to monitor your credit and ensure that you start with sound financial choices from a young age. You should start positive spending habits young, and never allow your situation to stop them from being your normal routine.

5 Hidden Fees of Prepaid Credit Cards

Many people think that using a prepaid credit card is ideal when it comes to not overspending, and they are especially appealing to those who have imperfect credit ratings. The problem is that these cards often have hidden fees that people do not know about before signing on the dotted line and opening the account. Once people start losing their hard-earned money, they begin to understand how much these hidden fees can really add up. At that point, the consumer must decide if they want to continue to lose money or if they should cancel the account, but that option doesn’t always remedy the situation.

The Sign-up Fee

The first hidden fee most consumers find out about is some type of sign-up fee. This can range from a few dollars to a hundred dollars, sometimes even more. This costs the consumer just to open up the account and have the privilege of using the credit card. The fee is usually taken out of the initial deposit, lowering the actual amount that can be spent right from the start.

The Deposit Fee

For some prepaid credit cards, the hidden fees lie with the deposits. They charge you every time you deposit money on to the card, no matter how much or how little you put on. These fees can vary, but each deposit typically costs the consumer a few dollars. If you add money to your account each week when you get paid, those few dollars can quickly add up and decrease the amount of money you have available to spend.

The Balance Check Fee

While many cards allow you to check your balance through some means for free, others will charge you some hidden fees to have constant access to that information. For example, most companies allow you to check your prepaid credit card balance online for free, but if you want to set up mobile balance checks, that often costs a fee each time you use it. The cost is usually minimal, but if you check your balance often, it can add up quite quickly. Even if the hidden fee is only a dollar, just checking your balance once a day can cost you $30.00 a month on average.

The Allowable Overdraft Fee

Some of the prepaid credit cards on the market today allow you to buy overdraft protection on your card. What this means is that you can overdraft your account by a slight amount if necessary to pay for an expense with your card. What the company does not often tell you is that there is a hidden fee involved with this privilege, plus the interest rate often contains a percentage with triple digits. This means that if you overdraft your prepaid credit card, you will likely be paying back at least twice the same amount you over-drafted by, plus the fees. That can add up quite quickly, even if you only overdraft your card by a few dollars.

The Cancelation Fee

The biggest hidden fee that most prepaid credit card companies do not tell you about is their cancelation fee. This is because they want you to stay with them even after you find out what the fees are going to be. They often charge a relatively hefty fee to try and deter you from leaving or stopping using their services. This fee is often unavoidable, so make sure you know and understand the fine print before signing up for any of these types of prepaid credit cards.
Prepaid credit cards can be a service of convenience, but they can also be costly. Make sure you fully understand what you are getting yourself into before signing up for one of these cards blindly. The fees can take away a good portion of your money before you even get a chance to spend it, if you pick the wrong card, so do your homework to help avoid any of the hidden fees you can.