I NEVER PLANNED to retire early. But I was toiling away in a job that had nothing to do with my college degrees or my previous work experience, plus it paid 40% less than the post I’d held for the prior 10 years. When my employer offered a meager early retirement package in 2020 to cut labor costs during the pandemic, I took it.
I’ve lived frugally ever since, as I had during the four years in my last, lower-paying job. My plan: Use money from a relatively small IRA for special expenditures, such as a big annual vacation.
In 2021, I withdrew some money from the IRA for a memorable trip touring some amazing national parks in California and visiting the awesome Big Sur coast. But this year’s planned two-week road trip to historic sites hit a snag: My IRA balance had been sharply trimmed by 2022’s stock market’s slide.
It didn’t feel right to sell investments for less than they’d been worth six months earlier, so I wasn’t sure how to pay for the trip. But I also didn’t want to cancel. My goal is to undertake bigger trips before I’m too old to walk and hike.
My son suggested getting a no-interest credit card, charging the cost of the trip and hoping the market turns around in time to pay it off. Initially, that sounded like a gamble. Since retiring, I’ve had just one general use credit card, and I always pay enough each month to get the balance paid off before the 3.99% introductory rate expires.
Still, I took my son’s advice and found a card with a 0% introductory rate. After thinking about it, I figured I’d have no problem paying it off before the teaser rate expires, even if my IRA fails to make big gains in the months ahead.
As I expected, signing up for a new card put me on a list to get more credit offers. The flurry of invitations included one containing an actual check for $6,524, which I could pay off in 42 “affordable” monthly payments of $218. The “special offer” is for back-to-school expenses, according to the letter. As I finished a master’s degree eight years ago, and my children are way beyond college and grad school, I don’t know anyone who’s going back to school.
The offer reminds me of how easily people can sink into debt from which they never recover. The “preapproved” check has an interest rate of 19.99%. If I cashed it for any reason, I would need to pay back $9,156, or $2,632 more than the sum borrowed. In these days of record inflation, how many people might feel the need to cash that check to pay for necessities, or perhaps be tempted to splurge on vacations or new furniture?
I’ve never been ruined by credit card debt, though there were times I got close. Much of the debt I amassed was for medical expenses for a family of four, including new glasses and contacts, visits to dentists and orthodontists, and regular doctor visits and prescriptions. I’d also charged unexpected car repairs. Yet no matter how many credit cards I had in my wallet, offers for new cards never stopped arriving.
Finance companies shouldn’t be allowed to send preapproved checks. Unlike applying for a credit card, it’s so easy to simply take the check and spend it. Who needs more than $6,000 for back-to-school expenses anyway? Besides, if you’re going back to college, you can get a much better loan rate than 19.99%.