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Watching our parents get older is never easy, and it’s natural to feel a sense of sadness that they’re beginning to lose their independence. This is why many people deny that their parents need help until a serious issue comes up.
However, this is not a healthy path to take, especially when it comes to your parents’ finances. If you visit your mom and dad and notice that they’re spending too much money on their credit cards, it’s time to take action. If you’re not sure how best to approach dealing with the situation, take a look at the information below for some important tips.
Have the conversation
The first step is to have an honest conversation with your parents about their spending. Depending on your their personalities, this might be a difficult talk. But it’s crucial to protecting their financial well-being, so don’t avoid it for too long.
Start by explaining that you’re concerned that they’re spending too much, and that you’d like to take a look at their most recent credit card bill. If they agree, look at the recent charges they’ve made, as well as any interest or fees they’re being charged. This will give you a good sense of how much they’re overspending and how much it’s costing them and will help you decide on next steps.
If your parents aren’t willing to let you look at the bill, or get angry or defensive about you asking about their finances, drop the matter for now. But don’t give up – keep talking to them about it when you visit and catch up on the phone. Eventually, they will likely come around.
» MORE: How to pay off debt
Minimize the damage
If your mom or dad’s credit card statement reveals that they’re seriously overcharging or in debt, it may be time for more drastic action (see below). But if it just seems that they’ve gotten a little lax about watching the budget and the due dates of their bills, a few simple steps could help minimize the damage and put them back on the path to responsible spending:
If you notice that your parents are getting hit with a lot of late fees, suggest switching to a card like the Citi Simplicity, which charges no late fees and no penalty APR.
If your parent is using a rewards credit card that carries an annual fee, but they aren’t using the perks enough to justify paying the yearly charge, suggest downgrading to the no-fee version of the card. This way, their credit will remain intact and they’ll be saving money.
American Express doesn't allow you to switch from a charge card to a credit card, and since they don't have charge cards without an annual fee, you can't downgrade to a version without an annual fee. However, Amex does have "senior cards" for the Amex Green and Gold, which have lower annual fees and are available to older, longtime cardholders.
If your parent's getting slammed with a lot of interest charges, think about finding a good balance transfer card so that your mom or dad can pay off their debt without incurring interest. A word of caution: This is only a good idea if you’re sure your parent won’t just turn around and charge up the original card all over again.
Consider a big switch
If your parents are seriously overcharging and small fixes aren’t enough to solve the problem, it may be time to encourage them to quit using credit cards altogether.
While prepaid debit cards don’t have the best reputation, they can be helpful to the children of aging parents. This is because they allow mom and dad to still have access to plastic, but will keep them from spending beyond a certain limit. Plus, there’s no danger of racking up interest charges.
A good prepaid debit card for seniors is the True Link from Visa; it allows you to set up specific protections, like blocking transactions to certain retailers or charities or putting a limit on how much your parent can withdraw from an ATM. As with all prepaid debit cards, TrueLink carries fees, but it might well probably worth it to ensure your parents’ financial safety.
If you need to take control
If suspect that a parent’s overspending is stemming from a medical issue, it’s time to have a doctor assess your mom or dad. If you discover that a cognitive problem is impairing his ability to use money responsibly, you will have to step in and take control.
If your parent doesn’t have a power-of-attorney in place, you can petition with to become his guardian, which will give you control over his finances. The steps to doing so vary from state-to-state, but see this resource for a guide to getting started.
The bottom line: If you notice that your parent is overspending on her credit cards, the worst thing you can do is sit idly by. Talk to your parent about your concerns - simple steps may be enough to solve the problem. If not, it may be time for your parent to give up credit, or possibly, control of her finances altogether.