New Credit Card When Retired

[Seat0B]

We have been in the new credit card denial roundabout too. Having valuable assets, multiple businesses and a SMSF amount to nothing if you don’t owe anyone anything i.e. have no debt.
We managed to get two credit cards through our local community bank when we transferred all of our quite considerable banking balances to them.
The two credit cards, one with a large limit and one with a small limit, both have my husband as the primary card holder. If, heaven forbid, anything happens to him the credit cards will be cancelled. I am going to try and procure credit cards in my name in case of this eventuality.

That seems very sensible @Numbat. Even in case you ever get to travel again, it's helpful to have cards with a different primary card holder in case a card gets lost/stolen so you don't end up with no cards that work.

 

[mrsterryn]

We haven't bothered trying for new cards now we are both retired. We have good defined benefits however I don't it would be enough.
@Flying mermaid mentioned up some posts ago re overdraft. We have kept ours as a safety net for son and his family.
The repayment goes in and we withdraw the excess. Our yearly interest is negligible. We both have two credit cards. Three with good limits, my little ones is Coles for points

 

[Seat0B]

Yes best pre-retirement advice we got was to keep our long-held lines of credit open, to update cards and increase credit limits if desired. So in that sense, we are set. However, as OP mentioned, it does make getting sign on points bonuses very much a thing of the past.

 

[Flying mermaid]

It is not just retirees having this problem.It is also an issue for those of us self employed. I have been knocked back for two CCs that I applied for purely for the bonus points even though i have a $4 million property portfolio. $3million SMSF and $300000 cash in the bank. Because we are self employed we keep our wages we pay below the high tax treashold. The reason they reject my applications is that they don't think I can make my repayments on the income on my tax return even though I have a perfect credit rating. It seems that they only want to issue new cards to salary earners with no assets or accompanying debt. Mind you these people could lose their jobs tomorrow.

Weird things happen with credit cards. . For years I had the credit card and Mr FM was a secondary holder on mine. I had a $26,000 limit and we were planning an overseas trip and I thought we might need more credit than that so I applied for a higher limit and got knocked back! This was when we were still running our business.

I was pretty peeved and phoned my relationship manager. He apologised and said the card area made strange decisions. He suggested given we only had 1 credit card to apply for another one in Mr FM’s name and he could approve it with a $26,000 limit and we would be fine. Seemed a sensible solution, so I filled in an application form for him with exactly the same info on his as I had put on mine. A few weeks later it was approved for $50,000! Only difference I could see was gender, but anyway it more than solved our problem so who cares.

We have hung onto those two and it is good to have two different cards in case one is scammed overseas, or even from the point of view of both us having separate travel insurance for when we travel. Madrooster pointed that out to me - pay for tickets separately when travelling to get two sets of travel insurance.

 

[Brissy1]

...-pay for tickets separately when travelling to get two sets of travel insurance.

In regard to the free credit card ins I presume. Why have separate ins? is there a discussion about this somewhere?

 

[Flying mermaid]

In regard to the free credit card ins I presume. Why have separate ins? is there a discussion about this somewhere?

Yes free insurance. Don’t know if there is a discussion. Madrooster is a FF contributor who is also a travel agent and when I booked through him I was going to use one cc to pay for both flights. He suggested paying for each flight with a different card. Where there were max limits, it meant each of us got the max. In most cases both the cardholder and the spouse got a certain value, but in some cases there was a combined max limit.

 

[Flashback]

Yes free insurance. Don’t know if there is a discussion. Madrooster is a FF contributor who is also a travel agent and when I booked through him I was going to use one cc to pay for both flights. He suggested paying for each flight with a different card. Where there were max limits, it meant each of us got the max. In most cases both the cardholder and the spouse got a certain value, but in some cases there was a combined max limit.

Sometimes on CC insurance though it will only cover people on the booking made on that card, so need to be wary of that. The AMEX plat charge card is quite tight around that, for example.

 

[Flying mermaid]

Sometimes on CC insurance though it will only cover people on the booking made on that card, so need to be wary of that. The AMEX plat charge card is quite tight around that, for example.

. Good point - with my card you just have to pay $250 of overseas travel associated with the trip for the trip to be insured so I don’t think bookings come into it, but I might check all the fine print the next time we travel out of Australia (if there ever is a next time )

 

[nickfromeastryde]

Yes best pre-retirement advice we got was to keep our long-held lines of credit open, to update cards and increase credit limits if desired. So in that sense, we are set. However, as OP mentioned, it does make getting sign on points bonuses very much a thing of the past.

I do agree and we have kept a seven figure LOC open into retirement however the downside is that it now probably precludes us from ever being able to successfully apply for a new CC ever again. It is a liability according to CCR even though you have a zero balance and they assume repayments against those limits of I think 5% of the balance so for a 1M limit they will include 50K in repayments for the year. On top of this, any existing credit cards are treated the same.

Much as I would like to keep playing the game, there is no way I will ever be cancelling cards or reducing CC limits. The LOC maybe as it is more a safety net for our kids. There comes a point where you need to hold onto what you have and going into retirement is probably one of those times

It's a growing market for the Banks, I do wonder if in years to come the Banks do become aware of people like us and change their assessment process to cater for it. I live in (probably deluded) hope!!

 

[Seat0B]

I do agree and we have kept a seven figure LOC open into retirement however the downside is that it now probably precludes us from ever being able to successfully apply for a new CC ever again. It is a liability according to CCR even though you have a zero balance and they assume repayments against those limits of I think 5% of the balance so for a 1M limit they will include 50K in repayments for the year. On top of this, any existing credit cards are treated the same.

Much as I would like to keep playing the game, there is no way I will ever be cancelling cards or reducing CC limits. The LOC maybe as it is more a safety net for our kids. There comes a point where you need to hold onto what you have and going into retirement is probably one of those times

It's a growing market for the Banks, I do wonder if in years to come the Banks do become aware of people like us and change their assessment process to cater for it. I live in (probably deluded) hope!!

The new credit arrangements are pretty tough, especially when they discount your actual income unless it is from salary as I mentioned upthread. I've since asked a relative who works in a bank, and they confirmed that the discounts applied to your income (=ability to repay) when you refinance a loan are similar to those applied to income in relation to credit card applications. I find it very odd as a government super pension (and maybe even SMSF pension) seem a lot more secure than salary these days!

We had a few credit cards with decent limits (around the $25k) that were used to run our small business, so we have kept these going for personal use. However, as per OP's comments, it is very annoying to miss out on sign up points etc. I totally agree with you about a bank seizing the market opportunity here, but I too am not holding my breath.

 

[Melburnian1]

A pre-retirement financial planner was good advice.
In retirement I have a very good Cwth pension on the old CSS plan and depending what age, annuity and 100K in the bank. A housing loan for 120K was actually difficult and took 4 weeks to process!! BTW, no debts, own another house outright. For stupid expenditure forms and a right pain. So I will be voting against the govt because APRA or whoever have no brains - only for sinking the economy with a one size fits all affordability template. A year ago I withdrew the savings and bought asx ticker GOLD and PMGOLD and did well. So I am not renovating and creating jobs (again, red tape and Spanish inquisition) and the banks don't get to pay me chickenfeed decimal points interest.

The only thing to do about older age discrimination is vote the b***ds out until banks stop acting like a building society, using us boomers for iron clad security. I also dumped excess savings into the mortgage offset, so their profit from the loan is negligible. I wanted to get a trading account with shares, but again too hard, never mind 5 or more percent garbage vs 2.9 on housing loan.

I'd like to create jobs, can afford to, but I am sitting on bullion because wise older persons see trouble ahead

The Federal Government has announced (with approval of Parliament, not guaranteed) easier access to lending for consumers.

I echo the comment of one above who said that coronavirus, in time, may see banks keen to gain new customers/poach other banks' patrons, although at present thay have to comply with the stringent - some may say 'too' severe - APRA regulations.

 

[CaptJCool]

The Federal Government has announced (with approval of Parliament, not guaranteed) easier access to lending for consumers.

I echo the comment of one above who said that coronavirus, in time, may see banks keen to gain new customers/poach other banks' patrons, although at present thay have to comply with the stringent - some may say 'too' severe - APRA regulations.

Yes I was going to mention thAt. I expect it will free up some approval arrangements because of “borrower responsibility”

Could this be age related discrimination?
In the event of your passing credit card debt is unsecured, I don't believe beneficiaries are obliged to pay it out from superannuation death benefit.

Yes, this is age discrimination and atypical of home loan Lending policies for those over 50 (30 year loan terms yaddie ya)

Perhaps there needs to be a groundswell to force open the approval policies which appear to come straight out of a 1950s banking manual (including the husband wife discrimination)

However, there need be a clear definition of income which is the main driver of capacity to pay.

Assets aren’t of themselves income, so they don’t a monthly repayment make

Card payments incur quite different levels of merchant fees
The policy and rates are here

Merchant Interchange | Mastercard Australia

Mastercard interchange balance the benefits and costs of electronic payments. Learn more about the benefits of interchange fees & rates, it delivers to all parties.

www.mastercard.com.au

Interchange | Interchange Australia | Fees and Charges

Visa interchange outlines the fees and charges for Australian institutions. Learn more about Visa fees charged and issued by merchant banks.

www.visa.com.au

Several definitions of income
Centrelink and ATO Adopt two different definitions of Income
Originally came across this from researching Age Pension

Centrelink Accounting income (basically everything)

Age Pension and government benefits - Moneysmart.gov.au

Government entitlements for seniors and retirees, including pensions, seniors cards and health care cards.

moneysmart.gov.au

And about lump sums here eg an annual royalty payment

Lump sums while on income support - Services Australia

A lump sum is a one off amount of money. They can count in your income test and may affect your payment from us.

www.servicesaustralia.gov.au

Superannuation counts in full for most age pensioners but there are some small concessions 10% (which tallies with the 90% Govt super advice up-thread) reduced from 50% to 10% in 2016 for defined benefit superannuats


ATO Taxable income

Retirement income and tax - Moneysmart.gov.au

How tax on your superannuation or other retirement income stream works, and where to get help if you need it.

moneysmart.gov.au

Tax and super - Moneysmart.gov.au

How much tax you'll pay on superannuation contributions, investments and withdrawals.

moneysmart.gov.au

Exempt income NANE & Capital not taxed & superannuation in Pension phase since 2007 except for former public servants in untaxed source super-funds, and this is what spawned the ever increasing excess franking credits refunds
Some capital gains may be counted

However, any tax-free income is not included in taxable income. So for those who need lodge an income tax return., While ithe tax-free amount is included on the payment summary which is inside the tax return, the calculated amount in the actual tax return only included the taxed and untaxed elements.

Of course, the vast majority of retirees simply don’t lodge tax returns as “accounting income” is not stacked, so on top of the tax-free status of superannuation Upto the transfer balance cap of $1,600,000 per person, one can with LITO and SAPTO Earn an additional $54,000 (per person) before one dollar of income tax is payable....

Since no income tax payments are required one might EXPECT gross retirement income to be equivalent to net income while working

EARNINGS
Working gross income $100,000.
Less tax. $26,500.
Net take home income $73,500.

Less mortgage P&I say. $23,000
Less voluntary super say. $5,000
(Less child support) say. $12,000
Less rates & utilities say. $8,000
Available Discretionary. $25,000.



Retirement income. $60,000
Less tax. ZERO
Net take home income. $60,000

Less mortgage P&I Say paid off. ZERO
Less voluntary super say no longer required ZERO
(Less child support) say Adult children. ZERO
Less rates & utilities say After Senior concessions $4,000

Available Discretionary. $56,000


Which might have more available cash to splash ?
And often with a couple EVEN MORE extra EXCESS CASH
A couple could have $100,000 each from tax-free super AND a further $54,000 each = $308,000 before the tax office comes calling

The CC Approval process is clearly Steeped in “1950s thinking” with ZERO understanding of today’s tax-free status of earnings

How Long Does It Take to Get a Credit Card? | Canstar

It can take time for your application to be approved and for your credit card to be sent in the mail. So how long can you expect to wait?

www.canstar.com.au

 

[ramboflyer]

Since no income tax payments are required one might EXPECT gross retirement income to be equivalent to net income while working

EARNINGS
Working gross income $100,000.
Less tax. $26,500.
Net take home income $73,500.

Less mortgage P&I say. $23,000
Less voluntary super say. $5,000
(Less child support) say. $12,000
Less rates & utilities say. $8,000
Available Discretionary. $25,000.



Retirement income. $60,000
Less tax. ZERO
Net take home income. $60,000

Less mortgage P&I Say paid off. ZERO
Less voluntary super say no longer required ZERO
(Less child support) say Adult children. ZERO
Less rates & utilities say After Senior concessions $4,000

Available Discretionary. $56,000


Which might have more available cash to splash ?
And often with a couple EVEN MORE extra EXCESS CASH
A couple could have $100,000 each from tax-free super AND a further $54,000 each = $308,000 before the tax office comes calling

The CC Approval process is clearly Steeped in “1950s thinking” with ZERO understanding of today’s tax-free status of earnings

How Long Does It Take to Get a Credit Card? | Canstar

It can take time for your application to be approved and for your credit card to be sent in the mail. So how long can you expect to wait?

www.canstar.com.au

Very informative, esp the bit about available discretionary income. Hopefully someone who has the capacity to change how retiress income is treated for CC applications will sit up and take notice.

 

[coolsteps]

bit hard to get approved if retired for most best hold one to existing cards. or try hsbc global visa debit card to get 2% cash back and bundall. on the news gov said credit card companies should ease up on lending cretira for applications so is there any chance someone on jobkeepers getting approved for a card or a homeloan now?

 

[ramboflyer]

bit hard to get approved if retired for most best hold one to existing cards. or try hsbc global visa debit card to get 2% cash back and bundall. on the news gov said credit card companies should ease up on lending cretira for applications so is there any chance someone on jobkeepers getting approved for a card or a homeloan now?

I understand your point about holding onto your existing cards but some of us need those juicy bonus points as its the only way for us to amass enough points to sit in the pointy end and access lounges etc. Up until now I have never cancelled a card to make a new application easier for approval but that may change now.

 

[Infrequent traveller]

I understand your point about holding onto your existing cards but some of us need those juicy bonus points as its the only way for us to amass enough points to sit in the point end and access lounges etc. Up until now I have never cancelled a card to make a new application easier for approval but that may change now.

I don’t have any insider information but believe the best bet would be aiming for the welcome bonus on Amex Charge Cards (for those haven’t got one). My rationale is 1. You get generous lounge access on an ongoing basis 2. It’s credit assessment may view asset strength more favourably (deferred payment not a part of its business model). The welcome bonus will easily offset the cost of the first year annual fee of $1450, not to mention the travel credit and other privileges coming with the card.

The catch is welcome bonus normally Is only available to new customers to Amex (not available to those holding any of its wide range of credit cards) BUT from time to time it will offer the bonus to those Amex credit card holders new to Charge card - I seized on that offer during a short 1 or 2 months window a few years back

Check the referrals forum for more

 

[ramboflyer]

I don’t have any insider information but believe the best bet would be aiming for the welcome bonus on Amex Charge Cards (for those haven’t got one). My rationale is 1. You get generous lounge access on an ongoing basis 2. It’s credit assessment may view asset strength more favourably (deferred payment not a part of its business model). The welcome bonus will easily offset the cost of the first year annual fee of $1450, not to mention the travel credit and other privileges coming with the card.

The catch is welcome bonus normally Is only available to new customers to Amex (not available to those holding any of its wide range of credit cards) BUT from time to time it will offer the bonus to those Amex credit card holders new to Charge card - I seized on that offer during a short 1 or 2 months window a few years back


referral link
Platinum Charge

I am eligible for the card as I have a bank issued Amex (Westpac) so my application would be treated as new. I can't apply however, as my income is not at least $100,000 and even if it was I'm not sure that I want to pay an annual fee of $1450 despite the 90,000 bonus points and $450 travel credit.

NAB have a Rewards Signature card which I have my eye on. 120,000 bonus points and you need "a regular income". I think it's a 3:1 conversion to Krisflyer miles but that's still ok for me. Annual fee $295

 

[albatross710]

I understand your point about holding onto your existing cards but some of us need those juicy bonus points as its the only way for us to amass enough points to sit in the point end and access lounges etc. Up until now I have never cancelled a card to make a new application easier for approval but that may change now.

I've just started the serious part of the transition to retirement with about 7 years to go and like many people here we should be in a good position. My question would be why bother with the run around from the banks all for the points which they can and do revalue at any time. Over a year ago I cancelled all our credits cards* and happily just settle any bills upon receipt. This means that the overhead of bills is not sitting on the fridge and then if paid by credit cards I felt I was paying it again on the monthly c'card statement. The non-business household financing on the cards was only about $2k revolving. So for a $4k investment I paid out the cards and keep on top of the bills.

Even these signon bonus don't look like they are free. There is a personal cost to all of the angst and why bother upsetting your retirement cash flows just for the bankers privilege which they outsources to Manila anyway.

Retirement air travel I'll do in Y with nicer hotels each end of the journeys and stopovers.

*Actually I did have to apply for a no fee, low interest card which we use for hotel and car rental deposits.

 

[DC3]

... why bother with the run around from the banks all for the points which they can and do revalue at any time. Over a year ago I cancelled all our credits cards* and happily just settle any bills upon receipt ..

AFF heresy. Be careful that you are not reported.

 

[GSP]

I understand your point about holding onto your existing cards but some of us need those juicy bonus points as its the only way for us to amass enough points to sit in the point end and access lounges etc. Up until now I have never cancelled a card to make a new application easier for approval but that may change now.

One strategy could be go for broke and apply for everything out there that looks decent. You may get a bite or two. The impact on your credit rating presumably with not likely to require refinance maybe less of an issue.

Is that strategy reckless - quite possibly!!