Should Grandma Still Have Her Own Credit Card?
It can be strange to suddenly have to take care of those who once took care of you, but eventually, there comes a point when our parents and grandparents will need a little extra help. Usually, this first comes about as a little more help up the stairs, or maybe grabbing grandma’s weekly groceries, and progresses from there.
However, helping out with their finances can be especially difficult. Not only do you have to gather information that you might not have access to (their passwords, SSN, and account numbers), but you essentially have to switch roles with your parents or grandparents, which can be unsettling for everyone involved.
Eventually, though, you’ll reach a point where just managing their finances from afar isn’t enough. Although you might be balancing their checkbook and managing their bills, their personal spending can become a problem too. Credit cards in particular can be dangerous. They’re the easiest way for your elderly loved ones to skirt around their financial reality and still indulge or overspend. Additionally, if they forget to pay their bill or simply find themselves unable to at the end of the month, then it only incurs more debt and fees.
Worst of all, they may not understand how their shopping or credit card usage puts them at risk for fraud or identity theft. A study by True Link found this fraud costs seniors over $36 billion a year. If they can’t remember exactly how, when, and where they used credit, it can become hard to fight fraud or unauthorized charges. You don’t want your loved ones going broke, but you don’t want to overstep your boundaries either.
When Should You Step In?
Before you get too ahead of yourself, think about whether or not it’s necessary for you to step in. You likely won’t have much ground to stand on if your aging loved one is just bad with credit cards. You certainly can counsel them to manage them better, and a discussion is definitely warranted. However, if mom has always been bad at remembering to pay the utilities or grandpa has always spent a little too much on his camping gear, then some advice is all you can really give. The situation isn’t a new problem for you to solve.
On the other hand, if age-related memory or judgement problems are preventing your loved one from managing their credit correctly, or creating new risks of theft and fraud, it’s time for you to step in. If they are misusing their credit card, that can be even more damaging than just depleting their checking account. Generally, the elderly are more likely to have stable finances and a sizable equity, but a poor understanding of the digital age. This makes them attractive targets for scam artists or identity thieves, who can absolutely decimate their financial situation. Having a good credit score is important at any age, and they don’t want to leave a bad financial situation behind when they pass.
When Should You Cancel A Credit Card?
If they are starting to become a detriment to their own financial future, it may be time to switch up their relationship with money. Specifically, you might want to cancel their credit card. Ultimately, doing so will probably damage their credit score, but it might be worth it to eliminate the temptation. As long as she has had the credit card for a while and pays it off, it shouldn’t be too big of a hit.
However, your loved one will probably still need to make purchases. They still have friends to get coffee with, birthday presents to buy, and trips to take. If you don’t trust them with a credit card, what are the alternatives?
Debit cards draw from your bank account directly instead of from a credit line. If your loved one is ridiculously wealthy, or more likely only makes responsible purchases, then this might be a feasible alternative. Some people struggle with remembering to pay their bills back on time, and debit cards can be a great way to avoid that hassle all together.
Certainly, you can give your loved one an “allowance,” an amount that is theirs to spend every month. This is the most direct way to control their spending, and it’s also has the strongest role reversal. However, if they can only be minimally trusted to keep track of their finances and you’re unwilling or unable to completely support them yourself, it might be your only option. This way, it’s still their money that they are using, but they’re unable to lose track or control of their spending.
Take On An Authorized User
Your loved one might not have savings to fall back on. Too many seniors reach retirement with little to fall back on, and that’s why they turn to credit cards. If your parent or grandparent still needs money after their Social Security, you might want to consider adding them as an authorized user to one of your credit card accounts. Make no mistake, you are unlikely to see a return on your investment, and adding them as an authorized user means that they won’t be on the hook for the bill every month.
However, that might be exactly what you want. If their spending is not excessive, adding them as an authorized user to your account can be the perfect way to keep track of all of their spending while helping out their credit. Plus, it may be easier for you to track their spending as well as keeping a closer eye on credit and security. This can better ensure nobody becomes a victim of identity theft, or falls victim to any other common form of credit card fraud.
Ultimately, this is an uncomfortable situation for everyone involved. Once you get in the swing of things, though, you’ll have a better idea as to how to meet their financial needs while minimizing your risk. Taking responsibility for an elderly loved one’s finances is overwhelming, especially when you’re deciding what approach to take. You’ll have to access their mental capabilities and spending history, in addition to your own means. Taking away credit cards might be unpleasant at first, but it can save them from living the rest of their life in stress and poverty.
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Dayton is a chronic Wikipedia addict, which is detrimental to her social life but stellar for her writing. She resides in Boise, ID, surrounded by her own frantic outlines, highlighted encyclopedias, and potatoes. The latter was not by choice.
This post was updated September 13, 2017. It was originally published September 16, 2017.