Ask Paul: Why do I keep being rejected for a credit card?

Dear Paul,

We are self-funded retirees.

Technically we have no need for 'credit' other than for the convenience and often necessity of using a card for online purchases and especially travel.

The credit card we have has no overseas transaction fees and is in my partner's name and I am a secondary cardholder. Unlike most accounts with this particular bank, we are not able to be joint holders.

It will be blocked (good) if there is any suspicious transaction, which is a hassle if we are overseas at the time with no back-up.

I have been unable to get a second card from a different bank (only a few with the same no-fee offering) presumably because I am not PAYE, even though we are more secure than anyone in PAYE who might get retrenched tomorrow. 

I think there is a clear discrimination issue here and there is likely a cohort of people in the same situation.

My parents changed banks recently and now only have a debit card, not a credit card.

I recommend that people get their credit arrangements sorted as individuals before they retire, particularly for travel. Friends have been unable to get their own card when a partner has died. 

I would be interested to know if there is any solution. - Candice

This is an excellent question, Candice, and a good reminder for all of us approaching retirement to think carefully about our need for a credit card.

As you say, it is easy to apply for credit when we have a permanent job, a good credit score and savings, but less so as we reduce our working hours. As part of our retirement planning, we should include credit cards we wish to keep or apply for while still working.

I'm working part-time and I ran into this problem when I wanted to change a credit card that gave me better frequent flyer points. I had had a particular card for years and always paid it off in full by direct debit.

The new card was offered by the same bank. So, I applied to switch to the new card I wanted, with the same credit limit, and to cancel the old card.

Obviously, the bank's risk is unchanged. But I got rejected by the automated system as there was no ability to add 'sources of income' apart from my work income, which was significantly reduced due to my part-time status.

This meant I needed to go online and find out what their requirements were, ring the call centre, wait in a queue and find out how to send in copies of a recent super fund statement, my accountants' details and, in the case of this particular bank, a term deposit we had.

Different lenders have different requirements. Some ask for things such as three months' bank statements or proof of rental property income.

Anyway, after a few calls, sending in documents and calling to follow up, eventually a new card arrived. But if I had done this when in full-time work, it would have taken an instant.

I was curious about age and getting a credit card. I read with interest a recent article about credit cards for seniors.

The publication's 'consumer sentiment tracker' claims that just 2% of people at or near retirement age had their application rejected from 2020 to 2023 compared with 16% of Gen Y and 10% of Gen X.

This makes sense to me, but I think, for people like you and me, Candice, the effort required to provide documentation is high.

My view is to get your future credit needs sorted out well before your part-time or full-time retirement.

It may be at this stage of life a debit card is just fine, but it seems to me that a good credit card can earn a lot of frequent flyer points, meaning free air travel, in particular domestic travel, which for us is a great money saver.

I also agree with you about having two credit cards in case of card suspension due to possible fraud.

We deal with this by having a credit card in my wife Vicki's name, with me as a supplementary cardholder, and I have a card with Vicki as a supplementary cardholder, then we both have debit cards.

While we are talking about credit cards, it is just critical for you and your partner to have a card in separate names and you each have your own bank account.

I see this too often where one person dies or becomes incapacitated and the other partner has no access to money.

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