Credit cards for pensioners

A credit card for pensioners. Are there options?

Being a pensioner might make getting a credit card more difficult, but it does not necessarily disqualify you.

Many banks and financial institutions offer a credit card that’s suitable to a pensioner’s income.

While it may be more of a basic option with none of the bells and whistles of a rewards credit card, for example, it can still provide you with the financial freedom to get on with enjoying your life the way you want. 

Approval varies from provider to provider, but, for pensioners, there is usually one proviso - you must earn enough income in the eyes of your lender to repay your debt. So the amount your lender allows you to borrow will be determined by your ability to pay it back, while taking into consideration other factors like:

  • Dependants

    Day to day expenses like groceries and utilities

    Other credit card debts

    Mortgage repayments or rent

    If you’re an Australian resident

    Council rates

    Car repayments and more.

You may be a pensioner, but it doesn't mean you don’t still have these kind of financial obligations. Everything will be taken into consideration.

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My income is small, can I still apply?

As mentioned before, just because you’re a pensioner, doesn’t mean you can’t apply for a credit card but your options will be more limited than someone who is earning a wage through employment. 

As long as you have some form of income and meet other criteria, then getting approval for a credit card should be pretty straight-forward. The average expected income is about $14,000, but this could vary between banks.

Does Centrelink payments count as an income?

Do you receive the pension as well as earn another income? Then some or all of it will be considered as part of your total income. However, if your Centrelink payment is your only income, then unfortunately you might not be considered as the right kind of candidate by your bank.

Why should I apply for a credit card?

You may not care for new clothes or fancy restaurants, but you may need access to a large sum of money quickly at some point. These times are nearly always unpredictable, so wouldn’t it be best to have access to as much as you need when you need it most? Here’s a list of occasions where a credit card could be useful. You could add your own here too:

  • Medical procedure
  • Funeral expenses
  • Utility bills
  • Car repairs
  • Flights
  • Minor home renovations.

What kind of credit cards are available to seniors?

Not one person’s life is predictable, so having a variety of products available allows you to choose the best one that fits your life. Some of them may include:

1. Low interest credit card - usually a no frills card with no points and lower fees and interest on your purchases. Great for saving as much money as you can on unnecessary fees and interest. Afterall, if you really want something, all you have to do is buy it, not accrue points in exchange for an item, right? Compare low interest cards.

2. Reward credit card - earn either cash back on purchases or points. expect to pay higher interest and fees for this privilege. Our favourite of the two is the cashback variety. You can earn up to 5% back of purchases you make. This really makes sense and is a great reward system in itself if you learn to play the game properly. In other words - repay your debt before the due date to make the cash payback worthwhile. Head to Mozo’s rewards card hub. 

3. Frequent flyer - working less or not at all? Then traveling may become your next favourite pastime! But what about your income? Perhaps you have a generous amount of Super you’re living off, savings or investment property that’s earning you a handsome lifestyle. Expect to pay higher fees and interest rates for this card. Frequent Flyers offers can be found here

Is there an alternative to a credit card?

We’re glad you asked. There’s nothing worse than feeling left out in the cold and feeling like you have limited options when it comes to buying what you need and want. Luckily, there are alternatives to consider. They may not offer all the financial freedoms of a credit card, but the alternatives sure let you get on with your everyday needs. 

  • Debit card - Nope, we’re not talking about your average debit card. We mean a debit card distributed by Visa and Mastercard via your regular bank. It acts like a credit card and even looks like one, but instead of using credit you’ve applied for, you’ll be using your own money instead. You may not have access to an abundance of money, but you will be able to shop online or over the phone because of the Visa and Mastercard element. And you’ll be saving on interest rates too. Who needs them anyway.
  • Prepaid travel cards - Like to travel but don’t want a frequent flyer card with high fees and interest rates? We hear you. A prepaid travel card allows you to dip into your own money, like a debit card, but it acts like a credit card. This means that wherever a credit card is accepted, so too will you prepaid travel card. It’s especially great if you don’t like carrying lot of cash around while traveling. and the bet nes? You don't pay currency conversion fees when you make a purchase or withdraw cash from an international ATM. Handy to have if you enjoy making purchases online from international stores too!

Choosing a credit card

We admit, it’s no easy task which is why we’ve simplified the process for you. All you have to do is have a think about your expectations when it comes to having a credit card while being realistic about your affordability to repay as you spend. Here are some other factors to consider:

  • Annual fees (may be higher for reward programs)
  • Fees for late payments
  • Fees for exceeding credit limit
  • International conversion fees
  • Cash advance fees.

For the easiest way to compare rates, fees and other factors, use Mozo's credit card comparison calculator for speedy results.

Traps to avoid

It’s one thing to have successfully signed up to a new credit card, and it’s another to understand what you’ve signed up for. We’ve had a good think about what you need to be aware of when you have that new shiny bit of plastic in your hands. It’s powerful stuff! 

1. Trust - not everyone has the good intentions you do. Fraudulent activity on credit cards is on the rise, so you need to stay vigilant about how you use it, where and who has access to your credit card information. For a more comprehensive understanding about how to use your credit card safely, read Mozo's tips on credit card safety

2. Promotions - You may have signed up for something wonderful, like 0% for the first 6 months, but have you taken note on when that promotion period ends? Banks are often too cheeky to remind you when the honeymoon period expires as a sneaky way to profit from your forgetfulness. Save the date in your diary so that you can spend consciously and saving on unmanageable debt. 

3. End of month - Spending sprees are fun aren’t they? Birthday pressies for the grand kids, something nice for yourself and a deposit on your next holiday. But can you repay what you’ve spent at the end of the money? Yep, we like the motto: you only live once too, but staying debt free at the end of each month helps you click over to the next worry free. It’s a good idea to plan you spending ahead of time compared to the income you receive and what you can afford to repay.

^See information about the Mozo Experts Choice Credit Card Awards

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