New Credit Card When Retired

[Brissy1]

and if using your tax return as evidence of income, then a voluntary $25000 tax deductible contribution to super (retired and under age 67), will show as a $25000 reduction in income, so,

increase your (tax free) income/pension from your smsf in June, ie as a pension not a lump sum so that it increases "income", then use that year's tax return as evidence of income, and redeposit the$25000 in July back into your smsf and also claim that as a tax deductible contribution (your smsf pays 15% tax on that$25000) if that works for you depending on your marginal tax rate. Interesting fact- you can contribute up to$25000 even if your super balance is above the $M1.6 if you also claim it as a tax deduction!
BUT I'm just presuming that increasing the amount that you withdraw as a pension is reflected in your tax return somewhere (although it's tax free) so that you can use it to show a higher income...not my area, my situation is different. Check all the above with a professional, don't believe everything you read on the internet including aff forums

Oh and you can't make a deductible contribution into a pension phase account, you'd "create" a contribution account and then presumably transfer it into a pension account. Or open a contribution account with Australian Super when they offer qff points and use them!

 

[Flying mermaid]

In the last few years of my working life, I was able to amass nearly one million miles of QFF points mainly through credit card sign-up bonuses. Year after year, I had no difficulty turning these cards over and getting new ones - together with the QFF points. However, since I retired 18 months ago, I have been knocked back for new cards. I currently have two cards, cards I have had when I was working - a CBA Diamond Awards Mastercard as part of a 'wealth package' and a 28 Degrees Mastercard. I think my problem is that I'm 'income poor'. Although I have a property worth approximately $1.5million, superannuation in excess of $.5 million and two newish cars, all paid off, and $6k in the bank, it appears to me that my relatively low income from pension super and aged pension hampers my ability to gain new credit cards and the QFF points that flow from them.

Does any one have advice to get around this problem?

Thanks.

We haven’t even attempted to get new credit cards as we knew the hassles wouldn’t be worth it. My accountant did advise us just before we retired to hang onto a 1/2 million line of credit we had and I wish I had listened to him, but I just wanted to simplify life.

A few years ago my daughter and her husband wanted to do a knock down rebuild of their house and their new loan would have meant they would have to pay mortgage insurance. We offered to guarantee to avoid that. What a lot of hassle that was and the ignorance of the bank guy we dealt with was breath taking. He wanted tax returns to prove our income from our super fund and refused to accept that it was an SMSF in pension mode so didn’t go on the tax return! I provided him with the audited SMSF accounts showing the assets and the pensions, but that wasn’t good enough.

In the end they compromised with us putting our house up as security and signing a guarantee but it was months of hassle!

 

[Flying mermaid]

increase your (tax free) income/pension from your smsf in June, ie as a pension not a lump sum so that it increases "income", then use that year's tax return as evidence of income, and redeposit the$25000 in July back into your smsf and also claim that as a tax deductible contribution (your smsf pays 15% tax on that$25000) if that works for you depending on your marginal tax rate. Interesting fact- you can contribute up to$25000 even if your super balance is above the $M1.6 if you also claim it as a tax deduction!
BUT I'm just presuming that increasing the amount that you withdraw as a pension is reflected in your tax return somewhere (although it's tax free) so that you can use it to show a higher income...not my area, my situation is different. Check all the above with a professional, don't believe everything you read on the internet including aff forums

Tax free pensions from SMSFs are not on the tax return unfortunately

 

[ledlightco]

In the last few years of my working life, I was able to amass nearly one million miles of QFF points mainly through credit card sign-up bonuses. Year after year, I had no difficulty turning these cards over and getting new ones - together with the QFF points. However, since I retired 18 months ago, I have been knocked back for new cards. I currently have two cards, cards I have had when I was working - a CBA Diamond Awards Mastercard as part of a 'wealth package' and a 28 Degrees Mastercard. I think my problem is that I'm 'income poor'. Although I have a property worth approximately $1.5million, superannuation in excess of $.5 million and two newish cars, all paid off, and $6k in the bank, it appears to me that my relatively low income from pension super and aged pension hampers my ability to gain new credit cards and the QFF points that flow from them.

Does any one have advice to get around this problem?

Thanks.

I had a similar scenario. CC provider wanted to see tax return which showed basically no income. The fact you may pay little or no tax has no bearing on the CC application or what income you actually derive. Just refer them to your accountant who should be able to provide an indication of income including any add backs you may be receiving. Kept all my cards and added QF Plat with Maquarie, no probs.

 

[suki]

Tax free pensions from SMSFs are not on the tax return unfortunately

Once in the pension phase you can’t take money out and then put it back in. Also the people in the decision making process wanted the last 2 years tax returns. In the end it’s all too difficult.

 

[Brissy1]

Tax free pensions from SMSFs are not on the tax return unfortunately

Well there you go, bummer. But it's interesting what the progress tax rates can become when retired, 0%, 21%, 34½%, 39%, 47%,15%. Tax on your top $25000 whenever that falls can be at 15%. Perhaps for another forum.

 

[Myrna]

This problem is going to be ours when we eventually can return to Australia (borders open again). Hubby has retired from work in the UK for almost a year. We currently have 2 cc (in Australia) - one from CBA and one from HSBC. We will keep those, but suspect will not be able to apply for any new Australian one, once we are back.

 

[Flying mermaid]

Once in the pension phase you can’t take money out and then put it back in.

Yes I know

Post automatically merged: Sep 16, 2020

This problem is going to be ours when we eventually can return to Australia (borders open again). Hubby has retired from work in the UK for almost a year. We currently have 2 cc (in Australia) - one from CBA and one from HSBC. We will keep those, but suspect will not be able to apply for any new Australian one, once we are back.

It is possible but seems more trouble than it’s worth just to get points.

 

[Flying mermaid]

as even tax free pensions have to be noted in the return, just no tax charged

This isn’t correct - not for an SMSF in pension mode pensions. Possibly for others - e.g. public service pensions.

 

[Brissy1]

Once in the pension phase you can’t take money out and then put it back in. Also the people in the decision making process wanted the last 2 years tax returns. In the end it’s all too difficult.

True you can't contribute to a pension account, so you create and contribute to an accumulation account (which I HAD to re-establish a few years ago after another rule change!) and you can even then tsf back into your pension account if <$M1.6
"Too difficult"? 1st time is a learning process but it keeps you mentally active, and easier than what I attempted yesterday... iPhone stuff by an android operator! perhaps all this for another forum but it's unfortunate people paying out several $thousand extra tax pa for the sake of gaining knowledge then < ½hours work pa moving a bit of money around.

 

[Flying mermaid]

True you can't contribute to a pension account, so you contribute to an accumulation account (which I HAD to re-establish a few years ago after another rule change!) and you can even then tsf back into your pension account if <$M1.6
"Too difficult"? 1st time is a learning process but it keeps you mentally active, and easier than what I attempted yesterday... iPhone stuff by an android operator! perhaps all this for another forum but it's unfortunate people paying out several $thousand extra tax pa for the sake of gaining knowledge then < ½hours work pa moving a bit of money around.

Aren’t there work tests involved, so if you don’t meet the work test you can’t contribute any longer.

 

[Brissy1]

Aren’t there work tests involved, so if you don’t meet the work test you can’t contribute any longer.

Yes only when over 67, perhaps then I'll be an uber driver with a poor work ethic

 

[Flying mermaid]

Yes only when over 67, perhaps then I'll be an uber driver with a poor work ethic

We are over 67 so not an option for us (although maybe Mr FM could - he is doing a bit of extra consulting these days due to a Covid lack of dividends and rent )

 

[Jacques Vert]

I noted in an earlier post that the cards with the highest sign-on bonuses generally require an annual income of $75+. That's $6,250 per month.

For those with an smsf, you can increase your pension payments to, say, $7,000 per month for two or three months (until you have a bank account statement(s) showing/confirming your regular income). You then apply for your card of choice and supply your bank statements confirming your income. Once the card is approved you can reduce your pension payments for the remainder of the year to either match the minimum required or any other (higher) amount of your choice.

You also need to reduce the credit limit(s) on existing cards to a minimum. While I have been successful in applying for a new card while having two existing cards, having only one (with a low limit) is preferable.

While I have had an increased number of rejections since relying on income from an smsf for the past 7 years, I've also been approved for 2 or 3 cards a year using the above strategy.

Also, try to keep your application as simple as possible.

 

[suki]

True you can't contribute to a pension account, so you create and contribute to an accumulation account (which I HAD to re-establish a few years ago after another rule change!) and you can even then tsf back into your pension account if <$M1.6
"Too difficult"? 1st time is a learning process but it keeps you mentally active, and easier than what I attempted yesterday... iPhone stuff by an android operator! perhaps all this for another forum but it's unfortunate people paying out several $thousand extra tax pa for the sake of gaining knowledge then < ½hours work pa moving a bit of money around.

Once in the pension phase, you can no longer contribute regardless of the SMSF balance. Anyway, by ‘too difficult’ I mean it was harder than applying for a mortgage, and it was not the first time I had tried. I eventually stopped bothering because it wasn’t worth the hassle. I have 2 very good cards so I decided to stick with them.

 

[suki]

I noted in an earlier post that the cards with the highest sign-on bonuses generally require an annual income of $75+. That's $6,250 per month.

For those with an smsf, you can increase your pension payments to, say, $7,000 per month for two or three months (until you have a bank account statement(s) showing/confirming your regular income). You then apply for your card of choice and supply your bank statements confirming your income. Once the card is approved you can reduce your pension payments for the remainder of the year to either match the minimum required or any other (higher) amount of your choice.

You also need to reduce the credit limit(s) on existing cards to a minimum. While I have been successful in applying for a new card while having two existing cards, having only one (with a low limit) is preferable.

While I have had an increased number of rejections since relying on income from an smsf for the past 7 years, I've also been approved for 2 or 3 cards a year using the above strategy.

Also, try to keep your application as simple as possible.

Two things: 1. the people checking my data wanted my last two years tax returns so no go on the last 3 months of income and 2. If you reduce a card limit the danger is not getting the same limit back, this actually happened to me. Banks and credit companies are getting more stringent in their checks and meaner with their lending. Interestingly when I was below pension age and not working (I retired early) I could easily get a credit card with no obvious income. The issue therefore seems to be age related more than anything else.

 

[Brissy1]

Once in the pension phase, you can no longer contribute regardless of the SMSF balance. Anyway, by ‘too difficult’ I mean it was harder than applying for a mortgage, and it was not the first time I had tried. I eventually stopped bothering because it wasn’t worth the hassle. I have 2 very good cards so I decided to stick with them.

"Pension" or "Accumulation" doesn't refer to the person, it refers to the account. I'm not suggesting that most retirees don't know this, but some don't realise the positive consequences. Retirees under 67 may be doing themselves a great financial disservice if they think that just because they're retired and have an account in pension phase, that they can't also have an accumulation account, and so can make a tax deductible contribution into that. The financial gain of an effective tax rate of 15% (and no Medicare levy) on your TOP $25000 of income can be far greater than collecting a few hundred thousand qff points, to put it into perspective.
But back on topic, reducing your taxable income this way by $25000 does -vely affect a bank's assessment of your income, even though you're just shuffling your own money around.

 

[Jacques Vert]

Once in the pension phase, you can no longer contribute regardless of the SMSF balance.

Sorry, not correct (perhaps we are talking at cross purposes).

I've been in pension phase for 7 years and have made contributions in all but one of them. Provided you are 67 or under (previously 65), or pass the work test, you can make contributions subject to certain limits, balance caps, etc. The contributions go into an accumulation account (not back into the existing account-based pension). You can then start a second pension based/converted from the accumulation account. in fact, you can start a second, third, fourth pension, etc.

 

[Jacques Vert]

If you reduce a card limit the danger is not getting the same limit back, this actually happened to me.

That's true. Depends on what your goal is, how much credit limit you need or can make do with, and so on...we are all different and have different goals. There's not much to be gained by having a credit limit greater than you use.

 

[suki]

Sorry, not correct (perhaps we are talking at cross purposes).

I've been in pension phase for 7 years and have made contributions in all but one of them. Provided you are 67 or under (previously 65), or pass the work test, you can make contributions subject to certain limits, balance caps, etc. The contributions go into an accumulation account (not back into the existing account-based pension). You can then start a second pension based/converted from the accumulation account. in fact, you can start a second, third, fourth, etc.

I am over 67. Sadly the inability to obtain credit cards isn’t widely known so the advice to those on this forum is to get the cards you think you might want, and also obtain higher credit limits whilst you can.