According to Nerdwallet, half of all seniors are carrying medical debt on their credit cards and a third need to use their credit cards for daily living needs. U.S. News and World Reports found that, despite the cost of living being on the rise, the average monthly Social Security check is only $1,413. Today, 44 percent of single seniors and 21 percent of married seniors rely upon their Social Security check for the vast majority of their monthly income.
Here at Golden State Partners, we field questions from seniors who are struggling with credit card debt. The following are some solutions to how seniors can get help with their credit card debt.
The Problem With Credit Cards in 2019
Since the average credit card today carries a 17 percent interest rate, it is no trivial matter to pay the cards down. Often, people are forced to primarily pay the interest each month and have little left to pay towards the principal.
Some Solutions
Create a Budget
Many of us do not have a budget we follow each month. We lose track of our expenses. Write down all monthly expenses and long-term expenses, like car registration and car maintenance.
Lower Expenses
If you can’t make ends meet each month and still pay down the credit card, see where you can reduce some expenses that are really unnecessary, like cable television, lattes or dinners out.
Another way to lower expenses is to take advantage of every possible senior discount you can. The Motley Fool has a list of senior discounts, and an AARP membership will provide you quite a few more. Examples are discounts for Amtrak, Roto-Rooter, Pep Boys, Walgreens, United Airlines, AT&T, T-Mobile, and IHop.
There are other programs that seniors and people on fixed or low incomes can utilize to help lower expenses. Using Benefits Checkup, you can find government benefits. These include a program that pays for some of your utility bills each winter, a program that sends out technicians to add more insulation and energy-saving devices to your home and free legal assistance for civil matters.
One caveat about using websites other than a government website to find out about government assistance is to never pay for the information.
Use Other Resources
If you still can’t pay the debt’s principle by lowering expenses, you can possibly consider either dipping into savings or taking a cash-surrender loan out of your permanent life insurance policy. People are usually allowed to borrow up to 96 percent of the investment portion of the policy and still retain a death benefit. This loan does not have to be repaid because the insurance policy will get back the proceeds of the loan and interest upon your death.
Make an Agreement With the Medical Provider
According to Nerdwallet, people often put medical debt on credit cards. This is usually a mistake because then you are going to have to pay interest in order to pay off the debt. Many people are able to work with the medical provider and make payment arrangements without having to pay any interest.
Lower the Interest Rate on Your Debt
If you have tried these other methods and still cannot pay down the credit card debt, you can lower the interest rate you are paying through two methods:
Zero-Interest, Balance Transfer Credit Card: If you have good credit, you can obtain a zero-interest, balance transfer credit card and pay off the balance during the introductory period with zero interest. That period tends to last for 12 to 18 months. With no interest payments to make, it is easier to pay the balance off.
Debt Consolidation Loan: If you will not be able to pay off the credit card debt in a year or so with a balance transfer card, a personal debt consolidation loan will allow you to pay off the credit card debt in a few years, often with a lower interest rate. With the lower interest rate, your payments will be lower, which will give your fixed income a bit of a break. Also, such a loan will have a date that the loan will be paid off. With high-interest credit card debt, the balance often is tough to pay off at all.
Here at Golden State Partners, we have solutions for people who struggle with high-interest credit card debt. Call us today for help