Credit card ageism

01.Introduction

In what appears to be a widespread pattern, self-funded retirees are having their credit card applications knocked back.

Making sure borrowers are creditworthy is essential to preventing financial systems from coming undone. For proof, look no further than the US lenders that handed out home loans like lollipops until late 2007 or so and then went bust as borrowers defaulted en masse, kicking off the global financial crisis.

The issues surrounding that event rightly gave rise to new responsible lending standards in Australia. But should credit card providers be allowed to turn you down just because your working days are over, regardless of your financial position? 

Judging by what consumers are telling CHOICE, some of Australia’s largest financial institutions appear to be leaving a major demographic out of their risk evaluation scenarios. A number of self-funded retirees have contacted us saying their credit card applications have been knocked back without due consideration.

For more information about credit cards, see our Borrowing section.

Widespread denial

GE Capital’s 28 Degrees MasterCard, which won the 2012 CHOICE Award for Best Travel Money Card, is a particular case in point. We still think it’s a winner when it comes to fees and foreign exchange rates, but getting your hands on one may be easier said than done. Rosemary, a CHOICE member and self-funded retiree who owns her own house and is debt free “apart from credit card debt, which I pay in full each month”, was refused a 28 Degrees card after applying online. 

So were members John, Sandy, Bob, Robin and Graeme.

Graeme said the refusal was based on his inability to show three payments to his bank account within a certain time frame in order to demonstrate a regular source of income. Providing a statement from a super fund account worth $3.5 million and a recent annual drawdown of $73,000 wasn’t satisfactory. 

“After a number of quite long phone calls, I was told that a letter from my accountants may help,” Graeme told us. “At that point, I decided not to continue, but I do worry about my credit rating because of the decline.” 

Becky’s attempt to get a 28 Degrees card for her 85-year-old mother-in-law, who owns her own apartment and has savings of $200,000 and an annual income of $23,000, met a similar fate. “I can only put the refusal down to her being too old, and maybe they thought she’d rack up a huge debt and then kick the bucket.”

Knockbacks are also being delivered by the big banks. Rita’s experience with ANZ, where she and her husband, John, have banked for 29 years, shows how difficult it can be even for long-time customers to achieve creditworthiness. 

Rita, who is 77, wanted to switch her ANZ Gold card into her name since her husband is about to turn 80 and lose access to the card’s travel insurance. Despite having the card for 15 years, ANZ refused to make her the nominated holder. (She had better luck with the St. George Low Rate Gold card.)

Another self-funded retiree, Lurline, detected “blatant discrimination” when she was given the cold shoulder after applying for a Woolworths Everyday Rewards Credit Card. “I rang them about it and was told that was the policy. I pointed out that a self-funded retiree has more security money-wise than a young employed person.” 

And Bruce, 75, was “disgusted” after his request to have the limit on his Platinum Westpac Visa Altitude Card upped from $12,700 to $20,000 was refused. He asked for the increase because his daughter had recently had a skiing accident in Canada and was forced to come up with $22,000 in cash to pay medical bills. 

“As my wife and I regularly travel overseas, I thought it would be wise to have a greater limit on my credit card in case of an emergency.” Bruce says he listed a monthly income of about $3000 and liquid assets of more than $100,000 on the application, but received a letter saying that wasn’t enough for the bank to approve a limit increase. 

Gary, a self-funded retiree who has been with the CBA for 20 years but whose credit card application was turned down by the bank, thinks it doesn’t make any sense. “Self-funded retirees are a sound risk – normally signified by that status alone.”