CHOICE membership

Credit cards and self-funded retirees


#1

CHOICE is looking at the issue of self-funded retirees being denied a credit card or credit increase because they don’t have a job. Has this happened to you or someone you know?


#3

No but as a self funded retiree I dread the day I opt to change banks because I expect this will be an issue.Good luck!


#4

I have, but not self funded reriree as not legislated retirement age. Never had a credit card and decided to spply for a 28 degree card for overseas travel, mainly to hire cars.

Was denied a credit card but was told if I got a statement of proof of income and statement of assets from a CPA, they would then consider approving a credit card. Such would have cost a small fortune (around $500).

Instead as my partner worked, we applied for a card in my partners name as the onus of proof was less and easier.

What annoyed me most is those living off investment income, including SFR, should be very low risk customers to credit card companies as such consumers demonstrate ability to manage their financial affairs, to gain their independent wealth and income. Such is ignore by the credit card companies.

They tend to use take home salary as the basis for decision making and not whether the individual has ability to fund credit card purchases … either through household budgets or other income/assets.

I have heard of the self employed also having to jump through far more hoops as well.


#5

Well, you know what annoys me about SFR not being able to get a credit card. If you have a credit card the Banks bend over backwards to encourage you to increase your credit card limit with no regard to whether or not you can meet payments. The more you increase your credit card limit the more the risk of defaulting on payments.


#6

Yes…the Bank of Queensland pulled that on me. Despite me trying to assure them I would be able to cover any expenditure by fixed deposits in their bank.


#7

Yes. Twice. Tried to get a second card for my wife from 28 Degrees. Denied. As I have three accounts with ING Direct, I responded to their invitation to apply for their new credit card. Denied. We are part-pensioners with super. Seems our reasonable asset levels aren’t considered.


#8

Yes. On the advice of my bank I applied for a second cc with a very low limit to use for internet purchases. They then refused the application on the grounds that I did not meet the income requirements. I complained and we eventually reached a compromise whereby they reduced the limit on my main cc and transferred this to my new one. The loan manager has told me my assets are irrelevant, only income from employment can be counted. I feel trapped by my bank as I understand if I change banks I would not qualify for any credit all.


#9

We are self funded retirees. We had great difficulty in obtaining finance for the construction of our next home. We own our existing home outright, we have no other investment/personal loans, and 3 credit cards between us which are paid off in full every month and no defaults on our credit report.

We did not want to sell our existing house to finance the build, we purchased the land outright and applied for a loan (50% LVR) on our current residence to cover the build. Given we are SFR’s, with a defined benefits super income which met the lending institutions’ criteria for servicing the loan, beside a number of additional requirements due to our age, they also demanded that our Title (ie loan collateral) be forwarded 7 days PRIOR to settlement, and kept threatening they would not proceed with settlement if we refused to comply. I indicated I was more than happy to comply if they were prepared to release the money 7 days before settlement. This stalemate continued up to the day of settlement.

I was prepared to re-schedule settlement (with another lender) and incur additional costs. Luckily it did not come to that.

There appears to be a lack of appreciation that retirees are just as capable of managing their financial affairs as well as any other age demographic. Financial Institutions seem to adopt either a bullying or condescending manner when dealing with “age positive” customers, and as such should be subject to discrimination laws…


#10

I’m on a disability pension with great credit rating, bills have ALWAYS been paid on time, gas and electricity bills have both 2/3 hundred dollars in credit, all my bills go via direct debit or centrepay and can’t get approved for a credit card for $2000 which would only be used for emergency vet treatments for my dogs. Even the bank which I’ve been a member of for over 25 years turned me down.


#11

We are self-funded retirees and for many years have had an ANZ Visa Platinum card account, with a high credit limit and a “companion” Amex card. Our credit record is impeccable. We have never paid any accounts late and the credit card balance is paid to zero on time every month. Earlier this year, ANZ decided to discontinue the companion Amex card.

In order to continue earning Qantas points at a higher rate than the Visa card allowed, I applied to Amex for a new Qantas Amex Discovery card, after noting from their web site that the qualifications were:
I am aged over 18
I am an Australian citizen or permanent resident or hold a current Business Long Stay Visa (subclass 457)
I have a personal or household gross (pre-tax) annual income of $35,000 or more
I have no history of bad debt or payment default.

We amply met those qualifications, so I was astounded and upset when the application was refused on the grounds of insufficient income. When I tried to contact the organisation to obtain further details I was told that no discussion could be entered into. I was further told that I could not re-apply until 90 days has elapsed from the rejected application.

It was then an easy decision that we will never deal with these Amex people again. They evidently have no loyalty to their customers so they will get none from us.


#12

I am with you 100%, but be aware that your ANZ Amex was an ANZ issued card and product, not an Amex issued card. They are two distinctly different companies that issue Amex branded cards their own ways in spite of the commonality of the Amex branding, Amex merchant fees, and processing.


#13

Thanks TheBBG. Understood. Following this debacle I applied for a “free” credit report because I feared the refusal would be recorded on my credit record. The report from Equifax was incomplete and unhelpful because they wanted to charge me for the full credit report that I had understood was going to be free. I recorded this experience on the relevant Choice Community topic.


#14

We’d like to thanks everyone for their contributions on this issue. Here’s the article we produced as a result:


#15

I think the easy credit holiday is over, the banks are pulling in their collective heads due to increased regulatory oversight and the likelihood that there is a lot of liar credit already in the community. Unfortunately it appears the increasing diligence is catching otherwise erstwhile good customers who have due to their circumstances little or no salaried income.
I feel with the massive run up in household debt over the last few years there is likely a lot of zombie credit out there some of which likely will never be repaid and I think the financial institutions realise that too…

A few years ago banks threw credit at anyone with a pulse because the incentive to increase their loan books simultaneously lifted their profits and handsomely enriched their staff who signed up the customers to new or increased credit. In the tightening cycle we are entering if history is any guide then credit will be much harder to obtain and creditworthiness will be harder to prove.


#16

If only we seniors were 19 again. The story includes a bit about how the online applications work.


#17

This may be investigated as part of the Royal commission or we can hope it is.


#18

How about those Terms of Reference. Did you notice ‘community standards’ is not in the definitions :worried:

I suspect they are quite different between Point Piper and the North Shore beaches and similar; and Betoota and many other locales…


#19

The topic and the pollies attention are all crickets.

In an idle moment this week I confirmed we self funded with verifiable pensions and annual PAYG statements regarding same are persona non-grata at ING, even when the pensions are government defined benefit plans paying double or more of the minimum income demanded of working people. The substantial savings account balances on their books as well as multiple years of pension verification by way of deposits is irrelevant.

I presume they don’t want to stand in line for our estates to pay the final bill. "You need to have a job to get an ING credit card’ was the terse reply to my query. Why my interest in an ING credit card? The no fee for foreign currency/overseas charges vis a vis the hassle managing the free cash balance in the transaction account required for the debit card.

This is yet another way we oldies are tacitly discriminated against.


#20

I’m happy with my 28 degrees card for that. Ultimately I figure it’s none of their business what other cards/income/etc I have - I’m not sure how they’d verify it anyway? I only have a few thousand on this card, just for the reasons you mentioned, my ‘big’ card is with a big bank …


#21

We have one too and only used for travel (and hiring cars when a credit card is required), but…was a real challenge to get without a PAYG job. We ended up cancelling the application made by mr and starting a new application with my other half who has a PAYG job.

For me to get a 28 degrees credit card, they wanted me to go to an accountant and have assets and income audited and the accountant to provide a statement that I could afford the card. I was not willing to pay $100s (if not $1000+) for an accountant to go over my financial situation to then write a statement that I could afford a credit card (to which I already knew was the case).

It ended up being easier for the other half to get one, and I am a secondary cardholder on the issued card.

Edit…with most retirees/self funded retirees, each financial situation can be quite different and may be quite time consuming for the credit card company to fully assess and understand the financial situation of the individuals making the application. As a result, they shun all into the same boat making it difficult to get a credit card. Maybe a solution would be if one didn’t have a credit card on retiring, is to get one immediately before retiring when process will be far simplier. One then has to hope that the conditions of the card don’t change dramatically over time.