Credit card options for retirees

[Oscarq]

Both SYD+1 and I applied for a modest credit limit increase on our 28° MC earlier this year. We both have significant income from investments etc but computer said “No” and the more you asked why the more they wanted more detailed and irrelevant info. Horrible experience - to the point I felt like cancelling the card - but that would be a step backwards!

Similar increase request rejected some years ago. I was working with very good income, great credit score, no loans. They would not discuss until I wrote a very entertaining letter expressing 28* MC would not be accompanying me on any future trips. Low and behold I received a telephone call. I was over the poor communication and cancelled the card. I did not receive any increase offer. Not concerned as replaced with a great Bankwest & several other CC's. Retirement is not the only time poor outcomes occur.

 

[KingHuang]

Thanks for all your replies, to summarise:

1. If retired, HARD to get a credit card even if ability to repay in full as income statement is required

2. Government pension is considered income (combined $40k~ year for my situation)

3. Best option is to apply for AMEX/NAB/Citi/Coles - any other suggestions?

4. Apply for the lowest limit card?

5. credit score does not matter

6. Say bye bye to churning

7. not sure if I missed anything else

 

[Peregrine]

I would expand point 2 cc providers seem to like seeing income from arms length income providers such as government pensions, superannuation pensions, and perhaps superannuation income streams (allocated pensions etc). As Burmans says (above) they like to see money regularly hitting your account.

In contrast, they may disregard superannuation investments in accumulation mode, and amounts in SMSF particularly where an income stream is not being paid.​

 

[SYD]

In contrast, they may disregard superannuation investments in accumulation mode, and amounts in SMSF particularly where an income stream is not being paid.​

That’s true for all assets, including non-super investments even when they can be generating significant income.

 

[Rnwillia]

I'm 12 years retired and recently tried to get a Virgin CC but they rejected me on the basis of no salary even though I have never failed to pay off my other CCs on time always. It's tough when you're a retiree as nothing seems to satisfy a CC application.

 

[CaptJCool]

Well I’m on a swing and a prayer

What with the demise of diners I need somewhere to charge up those horribly expensive J fares once my end of year tax cuts roll in

 

[auriga]

I wrote househusband and was declined by ANZ, NAB
This is with a 6 figure investment income, and a working partner.

 

[KingHuang]

I wrote househusband and was declined by ANZ, NAB
This is with a 6 figure investment income, and a working partner.

Yep same with AMEX - couldn't be bothered for them at the moment -_-

 

[luckypierre]

I'm 12 years retired and recently tried to get a Virgin CC but they rejected me on the basis of no salary even though I have never failed to pay off my other CCs on time always. It's tough when you're a retiree as nothing seems to satisfy a CC application.

Seems to be a common theme here for AFF retirees. Perhaps as the AFF website is continually promoting/advertising for various credit card providers, they could influence the CC providers to allow better access to CCs for responsible AFFers.
OK you don’t have to tell me, I know I’m dreaming.

 

[Gremlin]

There's a couple of points of 'reading between the lines' here but I've heard this from people who work in cards and would know...

There's a scenario that plays out that the banks try to avoid. The archetype is as follows.

Dear Old Harriet sells her family home and moves to an aged care facility after her darling husband Cyril passes on. Eventually her oncologist/geriatrician/cardiac specialist tells her it's time to get her affairs in order.

DOH talks to her financial advisor who tells her that she can withdraw everything from her SMSF tax free and distribute to her heirs, Karen and Ken. But if the money stays in the super fund it will be taxed upon distribution to Karen and Ken. She wants to leave her heirs as much as possible, so she winds up her super fund and distributes everything prior to the inevitable. She then pre-pays her funeral expenses on her high limit credit card.

Even though she may have been a multi-millionaire weeks prior, DOH dies penniless, with a substantial credit card debt. The bank wears that cost in full.

As you can imagine, banks don't like this scenario, but, by law, they are not allowed to discriminate based on age. So they look for other things that might mitigate this risk. Salaried or not is a good proxy for this, and one they are legitimately able to differentiate upon.

 

[Flyfrequently]

No rhyme or reason behind it methinks.

Mr Flyfrequently applied for CC prior to retiring (for the 2nd time ) in June.
He put part time as employment status, earning more than I do, no loans or debts, very sufficient income stream (allocated pension, shares, property, etc.)
Initially declined, he questioned it, had to jump through hoops but was eventually approved after 2 weeks.

Fast forward to October, I then applied as casual employee having only worked 8 hours in the previous 3 months (my solo payslip looked a bit sad) but CC granted in 3 days - no questions.

My first effort - and probably his last - at churning!

 

[Tiki]

I don't get why banks here think salaries are so much more reliable income than pensions. How many companies have folded in the last few years leaving 1000's of people out of work and probably with payments due to them and noncollectable? Jobs are getting shifted to overseas call centres leaving more Aussies unemployed. It seems everytime I refresh the news another construction company is out of business.

Pensions are 100% guaranteed and come with lots of extras like discounts on rates, utilities, transport, medical and such. Not to mention they are tax free. Why wouldn't the banks want to give credit cards to people who have been reliable their whole life, paid bills on time and manage finances responsibility? Just because you have a high income doesn't mean you know how to manage it responsibly.

It isn't like Australia in the USA (thank God) and banks do go on your Fico score and past history to determine if you are a potentially reliable customer. But here I can't even get one of those Citi Ready Credit loans, never mind a new credit card.

 

[Flyfrequently]

Think you nailed it in paragraph #2 @Tiki

As you say, we are reliable and are a "sensible" generation with our finances. Banks/CC card providers do not make any money from us staying out of debt and paying our bills on time.

 

[openseat]

This is all eye opening reading as I'm planning to retire in 3 to 5 years time with substantial investments and super account. The fact that you can get knocked back is a shock. I certainly won't be cancelling cards any time soon.

 

[mrsterryn]

Pensions are 100% guaranteed and come with lots of extras like discounts on rates, utilities, transport, medical and such. Not to mention they are tax free. Why wouldn't the banks want to give credit cards to people who have been reliable their whole life, paid bills on time and manage finances responsibility? Just because you have a high income doesn't mean you know how to manage it responsibly.

You mentioned tax free pensions and referenced various discounts. Centrelink pensions eg Age pension are taxable income and are assessed in addition to other income. If Centrelink is the only income then not enough income to generate tax payment requirements.
In regards to defined benefit pensions which are paid for life, a portion is tax free and the rest need to have tax paid on it
Other superannuation pensions do have different rules but also are impacted on the value of the portfolio. For example my mother literally lost half her superannuation portfolio which was funding her pension back earlier this century

 

[CaptJCool]

. The fact that you can get knocked back is a shock. I certainly won't be cancelling cards any time soon.

Well that’s what I thought

Until Diners crashed and burnt
Now I’m left with dud cards 1/2 point per $1
And someways to go with pushing new applications in post Optus data hack and with a healthy taxed superannuation.

 

[willclan]

My recent experience as a retiree of 13 years with substantial super assets, cash and property. Thought I would apply for a new points earning cc with a bank.
So applied online with a couple of banks, immediate rejection by the computer on one, and a few days another rejection after a request for further information. In both cases I supplied records of super payments and subsequent payments into my savings account. Had an excellent credit score.
I then decided on a different approach, and went to my local Westpac branch where a banker was more than happy to take my details and submit my application, which was subsequently approved.
She was very informative in that she said applications from retirees were dealt with by a separate section of Westpac credit cards, and were not subject to an automated computer rejection. She also indicated that the Government had changed the rules in relation to credit card lending which had made it more difficult for banks to issue credit cards to retirees, even with super income.
So that's my outcome, and maybe it is worth others considering a direct approach to a local bank branch to try and get a positive response.

 

[Gold Member]

Banks/CC card providers do not make any money from us staying out of debt and paying our bills on time.

Indeed, but don’t forget that the CC Providers still take a % slice of each transaction as well as by selling your data to third parties. Granted it’s not in the same ball park as interest paid at 20% but still worth their while.

 

[Seat0B]

This is all eye opening reading as I'm planning to retire in 3 to 5 years time with substantial investments and super account. The fact that you can get knocked back is a shock. I certainly won't be cancelling cards any time soon.

And make sure you get limits increased and apply for any new cards before you retire.

 

[Gold Member]

My recent experience as a retiree of 13 years with substantial super assets, cash and property. Thought I would apply for a new points earning cc with a bank.
So applied online with a couple of banks, immediate rejection by the computer on one, and a few days another rejection after a request for further information. In both cases I supplied records of super payments and subsequent payments into my savings account. Had an excellent credit score.
I then decided on a different approach, and went to my local Westpac branch where a banker was more than happy to take my details and submit my application, which was subsequently approved.
She was very informative in that she said applications from retirees were dealt with by a separate section of Westpac credit cards, and were not subject to an automated computer rejection. She also indicated that the Government had changed the rules in relation to credit card lending which had made it more difficult for banks to issue credit cards to retirees, even with super income.
So that's my outcome, and maybe it is worth others considering a direct approach to a local bank branch to try and get a positive response.

Was the application fulfilled with bonus/promo points attached? If so, that approach could be a possible workaround for CC churning in retirement.