Credit Card Approval

[dsimpso5]

Most of the credit cards require taxable income of $50,000 or $75,000. As I am retired and receive a substantial tax free pension from my self managed Super Fund I do not qualify. Has anyone been able to get a card in these circumstances?

 

[Dr Ralph]

Most of the credit cards require taxable income of $50,000 or $75,000.

I don't believe that this is correct. Many have much low limits than you suggest.

As I am retired and receive a substantial tax free pension from my self managed Super Fund I do not qualify. Has anyone been able to get a card in these circumstances?

There have been a number of different threads about exactly this question over the past 6 months. You may want to read through those threads. But in short, from what I can recall, it is a problem and you may have some difficulty convincing the credit card company that the income you have satisfies their requirements for equivalency to a salary.

 

[Franky]

The problem is they consider the ability you have to withdraw your super at any time and therefore have insufficient income to service your card limits. On the other hand though, you may well show a pay slip with the same amount of income as your super, despite the fact you may well be sacked or retrenched, but this will be taken into account as 'permanent' income.

 

[mhen]

My experience has been that if the tax-free pension from super fund is greater than the taxable income requirement there is no problem but you may need to provide bank statements showing the regular pension deposits over a period of time. The problem comes when the tax-free pension is less than the taxable income requirement even though the tax-free pension payment exceeds the after-tax component of the taxable income requirement. In this situation you have to have push to talk to a person and educate them about tax-free pensions. You may or may not be successful!

 

[Pug1]

Most of the credit cards require taxable income of $50,000 or $75,000. As I am retired and receive a substantial tax free pension from my self managed Super Fund I do not qualify. Has anyone been able to get a card in these circumstances?

Hi dsimpso5, I recently got a NAB Velocity card with the Amex one attached to the same account, and the 60,000 velocity points. I applied at the branch not on-line, and gave them copies of our SMSF bank account statements showing our withdrawals. The cards were approved within a week with no questions asked. We are in the same position as you in that all of our income comes from our SMSF and my wife and I are the only members and trustees. We do not take a very high income from the SMSF. I didn't ask NAB for any particular credit limit as I was not worried about that since they have a $6K minimum. However they gave me a limit of $15K. Hope that helps and I would recommend going into the branch and find a helpful person to talk to. Incidentally we did not have any accounts with NAB prior to getting these cards.

 

[Franky]

My experience has been that if the tax-free pension from super fund is greater than the taxable income requirement there is no problem but you may need to provide bank statements showing the regular pension deposits over a period of time. The problem comes when the tax-free pension is less than the taxable income requirement even though the tax-free pension payment exceeds the after-tax component of the taxable income requirement. In this situation you have to have push to talk to a person and educate them about tax-free pensions. You may or may not be successful!

See my post above - if you withdraw your entire super fund, which you are entitled to do, you no longer have any tax free income.

 

[whughes3]

See my post above - if you withdraw your entire super fund, which you are entitled to do, you no longer have any tax free income.

By the same token, if you are employed and then quit your job, or otherwise lose it, which you are also entitled to do, you no longer have any income at all!

 

[Franky]

By the same token, if you are employed and then quit your job, or otherwise lose it, which you are also entitled to do, you no longer have any income at all!

I said that as well...

 

[burmans]

See my post above - if you withdraw your entire super fund, which you are entitled to do, you no longer have any tax free income.

Not sure why this matter if the bank you are trying to get a loan with does not assess in this manner, both mhen and Pug1 have given specific actual experiences. So clearly at least a couple of lenders will accept pension income as income.

 

[Franky]

Not sure why this matter if the bank you are trying to get a loan with does not assess in this manner, both mhen and Pug1 have given specific actual experiences. So clearly at least a couple of lenders will accept pension income as income.

Sure - but I was responding to the original post and his circumstances. As a former lender for a credit union, that's the way we assessed our credit applicatons. Different folks have different strokes. With the big card issuers shovelling them out the door at the rate they do, they obviously have a fudge factor built in that covers an estimated amount of losses.

 

[theblank]

Most of the credit cards require taxable income of $50,000 or $75,000. As I am retired and receive a substantial tax free pension from my self managed Super Fund I do not qualify. Has anyone been able to get a card in these circumstances?

Most (but probably all) automatic credit card scoring systems will not automatically approve you because you dont fit into the standard box. They will spit out either Fail or Reffered. Most of the online only lenders are not going to be interested in talking about your application, some will reject and refuse to discuss further. They are interested only in mass scale business, they are not geared up to take on anything time consuming. So best to avoid those.

You need to get a credit card from your own bank where you have an existing relationship. The manager will sign off the card application under his own approval authority based on commen sense decision making. If you are applying to some branchless provider I think you are going to be pushing it uphill, if thats the case you really need to ring them first and get an indication whether they are going to be interested in making old fashioned decisions or not. And even then I dont think you can rely on call centre staff to even know for certain.

 

[Scash]

I applied for a couple of credit cards on line last year (and had them approved) and did not have to provide any evidence of income or employment to the banks. Maybe apply on line and note yourself as self employed as opposed to self funded.

 

[theblank]

Maybe apply on line and note yourself as self employed as opposed to self funded.

Sorry to say it, but I advise strongly to not do that. The automated systems check *everything* if you nominate self employed it means you have an ABN, they will check that, if it fails to verify, instant decline for giving false information.

Your credit profiles retain your address and employment history forever, they also check employers names against business names registers, white pages, , dates commenced, and other information . If you said you worked somewhere for 5 years, but business registered a year ago, and doesn't match existing credit profile date, that's a huge red flag.
There has been a lot of fraud committed in the past by syndicates getting credit under false names working for fictional companies, but now thy have come A long way in preventing that through these auto systems.
Sure when you applied for your credit they did not ask you for more verification, , that will be because all the info you submitted checked out and not because they are slack. They have already checked much more than you think.

 

[Renato1]

The NAB card application process has a section relating to after tax income, as opposed to just the pre tax income. That said, the people processing my application were confused with allocated pensions, and I had to use Maxthon browser to take snap shots of all my allocated pension statement pages, and get them to understand them.

I didn't see an after tax income section in the ANZ and Amex application process.

I've seen plenty of cards saying they require a minimum of $35,000 annual income.
Regards,
Renato

 

[drewbles]

The NAB card application process has a section relating to after tax income, as opposed to just the pre tax income. That said, the people processing my application were confused with allocated pensions, and I had to use Maxthon browser to take snap shots of all my allocated pension statement pages, and get them to understand them.

I didn't see an after tax income section in the ANZ and Amex application process.

I've seen plenty of cards saying they require a minimum of $35,000 annual income.
Regards,
Renato

There are many low-income cards. According to one website, $15k is all it takes for the Coles one:

Coles No Annual Fee MasterCard | Compare, Review & Apply

I'm sure you'd probably only get a $500 credit limit or something though at that level of income.

Banks will process on either pre or post tax income. If pre, they know what tax you're obliged to pay so it's just a calculation for them.