Can I get a credit card if I'm retired?

Am I eligible for a credit card if I’m retired?

Being retired won't necessarily stand in the way of you taking out a credit card. If you have a regular monthly income and a good credit history, you may be accepted, depending on the lender's criteria.

There's no standard upper age limit for getting a credit card in the UK, and lenders aren't supposed to refuse applications based on age alone without good reason. That said, some providers do set their own age limits, so it's always worth checking the eligibility criteria before you apply.

When it comes to income, don't just think about what you've stopped earning. Lenders will consider all sources of income, which can include your state pension, private or workplace pension, rental income, savings, or benefits. Include everything when filling in your application.

Should I get a credit card as a retiree?

This depends entirely on your financial situation. A credit card can be a useful financial tool in retirement — but it works best when used for planned purchases you know you can repay, rather than to supplement a stretched income. Make sure that you can always meet the full monthly repayments on time. Otherwise, you could build up debt and damage your credit score.

What are the benefits?

There are several benefits to getting a credit card as a retired person:

• A credit card gives you more flexibility. If you have something urgent to pay for, like a new boiler or roof repairs, a credit card may allow you to do this without having to save first. Just be certain that you can make at least the minimum monthly repayments each month.
• You may receive cashback or rewards with purchases on a credit card. This could benefit you financially if the rewards are something that you would use. Bear in mind that reward cards usually come with an annual fee and are reserved for those with the highest credit scores.
• Using a credit card to make purchases often gives you more protection than a debit card would. Section 75 of the Consumer Credit Act 1974 states that credit card companies must protect purchases made between £100 and £30,000. The card provider and retailer you bought your purchase from are jointly responsible if the retailer goes bust, or the item is broken or has been falsely advertised. Note, you won't be covered by Section 75 if you use an intermediary company like PayPal.
• If you plan to travel abroad, some credit card providers offer no foreign transaction fees. This could work out cheaper than using a debit card or taking money out of an ATM while on holiday. You will need to check which lenders offer this before applying.

What should I avoid?

Whilst there could be benefits to getting a credit card while retired, it's important to know the risks:

• Try to avoid paying a high Annual Percentage Rate (APR). This relates to the total cost of borrowing per year. Without a full-time salary, you may have a lower fixed income, which could mean lenders offer you a higher interest rate. Shop around before you apply — and bear in mind that if you pay off your card in full each month, you won't be charged any interest at all.
• Avoid using a credit card to top up your income on an ongoing basis. Retirement can bring a significant drop in monthly income, and relying on a credit card to bridge that gap can quickly lead to debt that's difficult to manage.
• Avoid making multiple credit card applications within a short space of time. This can give lenders the impression that you are in financial difficulty. Use an eligibility checker to find out if you're likely to be accepted before you apply, without affecting your credit score.

How to choose the right kind of card

When choosing a credit card, you'll need to consider what the best kind of credit card is for your situation, as well as your specific financial circumstances.

Reward schemes

Many credit card providers offer reward schemes, such as cashback and point schemes. These could make getting a credit card financially worthwhile.

You can use trusted comparison websites or a broker to find the best reward schemes for your financial situation. Be aware that a reward scheme will normally come with an annual fee — so it's only going to be worth the extra expense if you think you'll genuinely benefit from the rewards.

Interest rates

Most credit cards have an interest rate attached to them. However, lots of providers offer a 0% introductory rate, where you don't pay any interest for a fixed period. If your income has reduced since leaving work, you may find it harder to qualify for a 0% introductory rate than you did while in full-time employment, as lenders may consider you a higher risk. Shop around to find a card with the best rate you're eligible for.

Fees

Some lenders charge fees for using your card abroad. Others may charge for balance transfer services, where you use one credit card to pay off the balance on another.

Make sure you read the small print before signing up. It's important to know what fees apply so you can make the most informed decision.

What can I use my card for?

A credit card lets you spend money up to a certain credit limit — though it's best to keep spending to 30% or less of your limit for the benefit of your credit score. You borrow the money from the card provider and pay it back each month by making at least the minimum repayment.

You can use it to make purchases in person or at online retailers, although some companies don't accept credit cards.

You can also use it to build up your credit score if you have a bad or thin credit history. It's important that you can afford to pay at least the minimum amount each month to avoid late fees and negative markers on your credit report.

If you can afford to pay your balance off in full each month, that's even better — you won't be charged any interest, and it shows lenders that you're a responsible borrower.