I am now 70 years old and partially disabled. I am fully retired, living on Social Security and Supplemental Security Income. Obviously, I have limited income.
As a result, I don’t use cash. I always pay with a credit card rather than a debit card. I don’t carry any credit-card balances. I budget my money carefully and pay all my credit-card bills in full every month.RetireeThere’s a big difference between living on credit and using a credit card for your spending. You fall into the latter category, and you are paying off your card every month while racking up rewards, air miles and other perks. Debit cards do not, for the most part, offer rewards.
I would urge you to take advantage of all the credit-card perks, but also have at least six months’ worth of emergency savings for any unforeseen events, such as damage to your home or a medical bill that you have to pay out of pocket. One bad event could upend your life. That interest rate is a good motivation to keep on top of your monthly bills. Credit cards help you build a credit score, but you should also aim to keep your credit-card utilization rate — that is, your balance as a percentage of your credit-card limit — low.
But Ted Rossman, a senior industry analyst at Bankrate.com, also had this timely warning about the risks inherent in credit cards: “There’s a saying in the industry that credit cards are like power tools. They can be really useful or they can be dangerous.”
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We charge everything and pay it off every month. We chose a cash-back card that covers everything -- gasoline, groceries, and shopping. Our monthly credit card bill is in the thousands. The only down side is a credit score hit because our monthly bill is counted as debt.