Credit Cards For Pensioners
As a pensioner or retiree, you may not fit the mould of a standard credit card applicant. That can make it more difficult to get approved for a credit card. Why? When you apply for a credit card, you must meet certain eligibility requirements put in place by the card provider. If you don't meet the requirements, you might be deemed high risk and have your application declined.
So, what are card providers looking for? Two of the big factors job stability (and income), and credit history.
As a pensioner, you no longer have the stable job and salary. You can still get a credit card; you'll just need to work a little harder to prove you meet the card's eligibility requirements. You might need to provide documentation proving your income, as well as your assets. A good credit history will also help you get approved.
Comparing the Best Credit Cards for Pensioners
The truth is, there is no ‘best’ card – there's only the best card for the way you live. So, how do you live?
You just want an everyday card
You know you’ll be using your card day-to-day, but you’re not interested in earning rewards or using extra features like a balance transfer. You expect you'll pay off your card at the end of each month.
Your card: A card with a low annual fee – or preferably no annual fee – that provides you with a credit limit that covers your everyday spending.
You want a low cost card
You know you might carry a balance once in a while, so you want to keep interest costs down.
Your card: A card with a low interest rate that will help you keep interest costs as low as possible while you work on paying off your balance. A low annual fee would also be worthwhile.
You want a card for emergencies
You’re not interested in using a credit card day-to-day, but you want one should an emergency arise.
Your card: A card with no annual fee. A low interest rate is also a good idea, in case it takes a few months to pay off your emergency spending.
You want to earn rewards
You have a significant monthly spend and you want to make the most of it by earning rewards. You always pay your balance in full each month.
Your card: A rewards card that offers a good rate of return on your spending, within a rewards program that you value.
You want access to perks
You want to take advantage of credit card perks, such as travel insurance, travel credit and airport lounge access. You always pay your balance in full each month.
Your card: A premium card, such as a platinum card, which offers the extras you need at an annual fee that suits your budget.
Checking Eligibility Requirements
After comparing your options, you should have narrowed your list down to one or two cards. Before you apply, it’s time to check out that small print. Yes, it’s boring – but, it’s also essential if you want to choose the right card for you, while also making sure there is no reason for the card provider to deny your application.
When checking each card’s eligibility requirements, you will first need to check the minimum income expected of all applicants. As a rule, you will need to have an annual income of at least $15,000 to apply for a credit card in Australia. However, many cards require applicants to have an income higher than this. For example, applying for some premium cards requires applicants to have an income of at least $75,000 per year.
After making sure you meet the card’s income requirement, it’s a good idea to check where that income can come from. As an example, your card provider may accept Centrelink payments as a form of income, but if that is your only income, you may not be approved. If you’re unsure, contact the card provider to check.
Your credit history may also be a factor. When assessing credit card applications, card providers always check the applicant’s credit history. Providing important information regarding how well the applicant has dealt with credit in the past, their credit file allows card providers to assess how well they might deal with credit in the future.
As a pensioner, you are likely to have an extensive credit history – and as long as your relationship with credit has been good, this should bode well for you in future credit applications. To check your credit file, you can apply direct from any of Australia’s major credit reporting agencies (for free), or opt for a third party provider.
To find out more about what some of Australia’s biggest card providers look for when assessing credit card applications from pensioners, read this post.
Applying For A Pensioner Credit Card
So you know you’re eligible for the card you want to apply for, now you will have to prove it to the card provider. When you apply, the card provider will ask you to detail relevant information regarding your income, assets and debts. You may then have to provide documentation to back that up. If you have an accountant, you may have to provide your accountant’s contact details.
Examples of documentation you may need to provide include (dependent on your situation):
Should you apply for a credit card with your bank? In some cases, applying for a credit card with your current bank could make it easier to get approved, especially if you have a good, long-standing relationship. You could try speaking to your bank to see what they could offer you. It’s always worthwhile comparing options elsewhere, however, to make sure you are getting a good deal.
Using Your Card
You’ve been approved. Congratulations! With your new card in hand, it’s a good idea to stick to a few guidelines, as follows.
Understand your introductory offer: If your card has an introductory offer, make sure you understand how it works. Know when the introductory period ends – and what happens when it does. If you need to meet certain requirements to be eligible for the offer, know what they are and make sure they are doable.
Keep on top of your spending: Use your card’s resources to keep on top of your balance, whether that’s using phone banking, online banking or your card’s app. You can pay off bits of your balance through the month if you wish, but always try to clear your balance at month’s end.
Be on the lookout for fraud: Keep your card and the details on it safe. Don’t tell anyone your PIN, and if someone asks for your card details over the phone or online, consider whether it’s safe to do so. Stay vigilant.
Pensioner Credit Cards - Frequently Asked Questions
When comparing options, consider the following:
Suitability: Think about what you really need from your card, then compare the options to find the one that matches your needs.
Affordability: Check the card’s annual fee and make sure that it not only fits your budget, but offers value in terms of what the card is providing you. If you think you might carry a balance, check the card’s purchase rate as well.
Eligibility: Before applying, check the eligibility requirements set out by the card provider. These will typically require you to be an Australian citizen or permanent resident, with a minimum annual income. Your credit history will also be a factor.