Personal Finance Writer
Writes regularly about personal finance and health
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As we age, our financial needs evolve. So, too, should what we look for in a credit card, experts say.
When used strategically, credit cards can help us achieve our financial goals. In years past, card issuers offered a small number of cards that appealed to a broad range of consumers, says Jim Miller, vice president of the Banking & Credit Card Practice for J.D. Power.
However, today many issuers target different cards to specific niches of customers. For example, one card might have rewards that appeal to millennials while another might have features more important to seniors.
Yet many people rarely change credit cards at all. A 2018 survey by CreditCards.com found 49 million credit cardholders have never switched from their favorite cards. Of those who do switch cards, 47 percent do so for a better rewards program, according to the J.D. Power 2018 Credit Card Satisfaction Survey.
Finding a credit card that’s in sync with your current financial goals can save you money. Here’s how your credit needs may change each decade.
See related: 6 ways to get the most from cash back card sign-up bonuses
In your 20s
If you’re just starting out in your career, you may not have much disposable income. Look for a card with no annual fee, says Stefanie O’Connell, a self-described millennial money expert and author of “The Broke and Beautiful Life.”
Building credit should be a top priority, so don’t worry too much about rewards when it comes to getting your first card, O’Connell advises.
“At the beginning your focus is learning how to use credit. If you start with a credit card with great rewards it’s easy to get wrapped up in chasing rewards, and you could find yourself spending more on interest than those rewards are worth,” O’Connell warns.
If you want rewards, look for those that will be most beneficial. The average student loan debt for Class of 2017 graduates was $39,400, per Student Loan Hero. With a cash back card, you could use your earnings to throw extra money at it.
Also consider your lifestyle. Forty-nine percent of millennials spend more on eating out than on saving for retirement, according to a LendEDU study.
Some cards, such as the Capital One SavorOne Cash Rewards Credit Card, offer as much as 3 percent cash back on restaurants. The card charges no annual fee and only requires good-to-excellent credit to get approved.
Another option, especially if you’re still building credit, is the Discover it® Student Cash Back, which offers 5 percent cash back on rotating quarterly bonus categories – including restaurants and groceries – on up to $1,500 per quarter. This card, however, requires you to enroll in the bonus category every quarter..
“If you start with a credit card with great rewards it’s easy to get wrapped up in chasing rewards, and you could find yourself spending more on interest than those rewards are worth.”
In your 30s
In your 30s, you may be preparing for important life milestones such as marriage, raising a family and saving for a house.
Cash back cards may be helpful since you can save on everyday expenses while socking away funds for a down payment on a home or some other type of financial goal. Several cash back cards offer 1-1.5 percent back on all purchases, but some provide extra savings on certain types of spending.
For instance, Discover it® Cash Back offers 5 percent back on up to $1,500 in spending on various categories each quarter, after you enroll. Chase Freedom also offers 5 percent cash back on up to $1,500 in spending in rotating categories throughout the year.
You can also use a card to spread out a large expense, says O’Connell, who is in her 30s. For example, if you were planning to spend several thousands of dollars in wedding expenses, you might look for a card with a 0 percent intro APR and pay the balance over that period of time, O’Connell says.
Mary Beth Storjohann, a San Diego-based financial planner who works with millennials and Gen Xers, says she often sees people in their 30s starting businesses. Business credit cards such as the Capital One Spark Cash for Business and the Ink Business Cash Credit Card can net you cash back on all of your business purchases.
See related: Young adults shouldn’t wait too long to get started with credit
In your 40s
Parenthood is a major focus for many people in their 40s. You may be saving for your kids to go to college or spending money on children’s activities, says Storjohann.
Your credit cards can help you save money for college expenses. Cards such as the Barclays UPromise World Mastercard and the Fidelity Rewards Visa Signature let you automatically contribute cash back to a 529 College Savings plan for your child.
However, non-mortgage debt, including credit card debt, increased 15 percent among members of Generation X from an average of $20,000 in 2014 to $23,000 in 2017, according to a survey by Allianz Life Insurance Company. If you’re carrying a credit card balance, focus less on rewards than getting the lowest interest rate.
In your 50s
At this point many Americans find themselves to be empty-nesters. With a child entering college, you may be thinking about their needs as they leave the confines of home.
Not only do many credit cards let you add your child to your account as an authorized user, but some have perks and rewards that can help as well. For example, if you’re worried about your college-age child getting around in an unfamiliar town, the Platinum Card® from American Express includes Uber credits of up to $15 per month (and $20 in December) that can be redeemed for rides. But like many elite rewards cards, it has a hefty annual fee ($550).
Likewise, parents who have children on their cellphone plans might also be interested in the no-annual-fee Uber Visa Card or any card from Wells Fargo because they offer cellphone protection. This perk can help you replace your college child’s phone if he loses or breaks it while shuffling around campus.
If you plan to carry a credit card balance, focus less on rewards than getting the lowest interest rate.
In your 60s
If your kids are grown and you’re approaching retirement age, you might have more free time to travel. Look for cards that have lucrative travel rewards and perks, such as the Chase Sapphire Reserve, which offers 3x points on travel and dining purchases, a $300 annual travel credit and other features such as trip insurance and travel assistance. (The card also has an annual fee of $450.)
Other cards may offer extra points on travel-related costs such as hotel fees. For example, the Capital One Venture Rewards Credit Card offers 10x miles for hotels booked and paid for at Hotels.com.
If you take advantage of AARP benefits, you might consider signing up for the AARP Credit Card from Chase and using the cash back you earn to pay for your membership.
See related: AARP study: Consumers putting themselves at risk with unsafe online habits
In your 70s
One of the biggest financial challenges seniors face is healthcare costs, says Mike Sullivan, director of education at the credit counseling organization Take Charge America.
Many seniors find certain procedures aren’t covered by insurance and end up charging them instead. A 0-percent promotional offer might lower the impact temporarily provided you pay it off before the promotional period runs out.
Seniors should take special care to avoid using credit for rewards unless they have the money to pay the bills in full each month. Sullivan noted that unlike younger generations, seniors typically don’t have a rising income to look forward to.
Review the cards you have, whatever your age
No matter what stage of life you’re in, checking your credit cards periodically to make sure they are the best tools for your current needs can save you money over time.
“If you’re not looking to see what’s out there, you are leaving money on the table,” Miller says.