I have $1.6m in super but can’t get a credit card. Am I too old?

I once had a wonderful credit card, Wizard, just great for overseas travel. When it changed to Latitude, conditions steadily deteriorated, with the latest blow being a regular monthly charge. So I applied for other cards, and much to my surprise was knocked back. Am I too old (75 years)? Do I spend too much on holidays (that’s what my super of $1.6 million is for)? Are my other credit card limits too high? Why? The credit card companies refuse to tell me and won’t give me any indication of what I should do to be eligible. As you said last week, I shouldn’t keep applying for cards or risk my credit rating. What is the way out of this? Jan.

Jan, this is a story I hear over and over again: older Australians being rejected for credit. And when I say “older”, I mean as young as 50.

This is despite good credit scores, solid repayment histories, significant assets or money in the bank and even despite existing banking relationships.

No matter how flush you are, once you hit a certain age it can be tough to get a credit card.Credit: Dominic Lorrimer

So what’s the problem? Banks value earned income far more highly than unearned, as they do when it comes to home loans. This makes it incredibly difficult to get approved for any credit after you retire and stop earning. Or even as you theoretically approach that date.

Here’s the experience with credit card applications of several other older readers who’ve contacted me or commented on last week’s column about the best credit cards: “I wonder if you could use one of these articles to address the issue of retirees being unable to obtain a credit card,” one asked.

Another: “I tried to change card providers and despite having considerable verifiable assets and cash reserves, I was asked to provide wage slips. This despite retiring 14 years ago. [I] stayed with my current provider and was given a measly $2000 increase … baffling logic or lack of.”

And a third reader said: “I retired then asked for my credit card limit to be lifted and it was refused because I did not have weekly earned income slips (PAYG), even though my assets both in cash and investments were substantial and a matter of record with the same bank.”

Readers have also reported to me being refused as long as a decade before retirement.

Now, there are two other reasons – apart from the obvious, like a bad credit score or record with debt – that will see anyone rejected or with a balance that is reduced:

1. If you don’t have enough clear, uncommitted income to repay your full credit limit within three years.
2. If what is called your credit utilisation ratio – how much of what you can spend, you have spent – is topping out across your existing cards. Anything above 30 per cent is probably a red flag for an institution.

Now let me be clear that we are talking about responsible use of credit cards here – I would never advocate one where it is lubricating debt.

But what you lose if you don’t have a credit card – beyond maybe convenience and the ability to deal with cashflow mismatches – could be: complimentary travel insurance, frequent flyer or other reward points, and the ability to pay in some places overseas.

Yes, not all overseas vendors accept an international debit card (and watch, too, that many require a physical card rather than a digital one). So, what can you do about it, Jan?

Well, you will – sadly and more expensively – have to source travel insurance separately.

Ways you could still earn frequent flyer points – besides flights – are the various shopping websites and merchant partners of the schemes. For example, Qantas Shopping gives multiple points-per-spend at many merchants, and you can also earn points at BP and through Everyday Rewards (Woolworths, Big W etc).

And you should be fine to pay in most places overseas with an international currency card pre-stacked with your cash. Just be sure to take the actual card with you.

At least, in the case of people with significant assets, there is hopefully ready access to money.

Because I’m sorry, Jan, but if other readers want to keep access to a credit card, they need to try and identify the one they will want long term … and probably before age 50.

Nicole Pedersen-McKinnon is author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, X and Instagram.

• Advice given is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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