How to pick the right credit card if you are retired

There are 41 million Americans 65 or over – presumably in or near retirement, but many of whom still lead an active financial life. For them, a credit card can make a lot of sense.

Among the reasons to have one: not every transaction lends itself to cash; many cards offer rewards and other incentives; and some come with purchase protection – almost like an extra warranty.

Like any tool, a credit card can be abused. In 2010, nearly a third of households headed by a 65- to 74-year-old carried balances on their credit cards, according to the Federal Reserve. However, when used wisely and responsibly, a credit card can be an advantageous way to manage cash flow and even earn a few rewards. Here is what a good retiree credit card should look like:

1. Terms are easy to understand and compare

Do not get caught up in the details. Pick cards that have straightforward terms and conditions that you clearly understand. If something does not make sense, move on. When comparing credit cards, look beyond the promotional interest rate and evaluate the rate that goes into effect after the promotion expires if you plan to carry a balance.

Because the average retiree has only modest annual earnings – $26,000, according to the Social Security Administration – locking in a low interest rate may be more important than any benefits received from a rewards program. High finance charges on even a little credit-card debt can have such a serious impact on a household budget that it pays to get the lowest rate possible.

The simplest rewards programs to understand and manage are cash back programs. Retirees who travel frequently may also receive benefit from travel rewards in the form of airline miles.

2. Low-tech account management

Younger customers might flock to cards with Internet access and smartphone apps, but many retirees may want to conduct business the old-fashioned way. That means getting monthly paper statements that come in the mail, and a toll-free number to call when you have questions or want to check your balance. If you prefer talking to a real person, pay particular attention to the customer service side of the bank or issuer of your credit card.

Also, make sure that if you want those customer-friendly, low-tech options, they do not come with a fee.

Ignore credit card offers that arrive in the mail. Searching online will yield cards with better terms than offers that arrive in the mail. If your online research skills are limited, ask a computer -savvy friend or family member for help.

Finally, before applying for a credit card, obtain a personal credit report and resolve any discrepancies. Negative entries in a credit report result in higher interest rates. One study found that 1 in 4 credit reports contained serious errors.

Picking a credit card does not have to be complicated or intimidating. Take your time. Do your research. Make sure you understand what you are doing and where to go for help if something goes wrong.

– Michael Germanovsky is a credit card expert and the editor-in-chief of Credit-Land.com, a credit-card comparison website.