Banks appear to be discriminating against older customers in one key area, according to a new report.
On the surface, the practice may appear prudent, but the one-size-fits-all policy is unfair, say many older Australians and consumer advocate CHOICE.
The issue is credit cards. On the plus side, banks are largely eliminating loans being taken out by individuals who are likely to struggle or be unable to service the debt.
However, there is anecdotal evidence that these same banks are also denying loans to customers who say they demonstrably can afford repayments. And those customers are claiming that the banks are making those decisions based purely on their older age.
CHOICE cites these recent examples: Chris, a self-employed 71-year-old from Sydney, and Marilyn, a 72-year-old self-funded retiree looking to build up her own credit history, having been the secondary cardholder on her husband’s card for several years.
Chris applied for a credit card via the Commonwealth Bank’s online portal, but his application was denied, accompanied by a message saying he didn’t qualify.
Read: Applying for a credit card on the Age Pension
Sometimes the rules surrounding online applications can be subject to rigid rules that don’t suit all circumstances, and a chat to a bank representative in person can resolve such anomalies.
(I can claim personal experience in this, having once had an application for a loan restructure that was to reduce my repayments denied. After a quick visit to the bank, the manager overrode the rules that had initially resulted in a ‘computer says no’ response.)
Chris hoped that this would be one such case but when he spoke to the bank, he was shocked to be told it would be “unsafe” for him to have more credit, despite him demonstrating a clear income stream that showed he could comfortably cover the repayments.
Even after Chris offered to reduce the amount of another existing card in his name so that his total credit would remain the same, the bank denied his request.
Read: Threat of ‘postcode discrimination’ skewing credit scores
For Marilyn it was a different bank – ANZ – but she received the same response – she did not meet the bank’s lending criteria. Like Chris, Marilyn said she could easily have taken on the cost of the card.
Why, then, are banks doing this? Credit cards are, after all, a core part of their profitable business. It seems that this could be where age becomes a factor. Older people, as a rule, tend to pay off their outstanding balances in full every month, in stark contrast to those (usually younger) customers who pay off only the minimum.
It is, of course, those who pay off the minimum from whom the banks profit most. This may lead banks to adopt a ‘what’s in it for us?’ attitude to older borrowers, and then turn their applications down when they realise the answer is probably going to be somewhere between ‘not much’ and ‘nothing’.
Read: Will a loan affect your Age Pension eligibility?
CHOICE points out that Chris and Marilyn are not isolated examples and that many other retirees have shared similar experiences. When approached for comment, the Commonwealth bank did not respond to CHOICE’s question about age being a factor and the ANZ stated that age did not come into the decision-making process.
Ian Yates, chief executive of advocacy group COTA, argues that banks and regulators should be more flexible and pay closer heed to the financial situation of older Australians before refusing to grant them credit due to irregular incomes that may include dividends and occasional wages.
Until that happens, though, you might have to shop around more than you had hoped, or make sure you get a loan approved before you reach the age at which the big banks think you’re ‘too old’ for a credit card.
Have you applied for a credit card recently? Were there age-related hurdles? Why not share your experience and thoughts in the comments section below?
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I have had a ‘rewards’ credit card for decades. It cost more in fees than one without.
But the ‘rewards’ I chose – $50 credit off credit card – always covered the extra amount, plus more.
Now older, I spend less, so no longer found the ‘rewards’ financially helpful and wanted to change to a non-rewards card – so far without success, as my pension income is not considered high enough.
I have always paid off the whole balance monthly and it has a credit limit of $21,000, as I accepted every upgrade offer as they came over the years.
But that history is not outweighed by my negatives – 73 and on a pension!
The banks lie. They do consider age and discriminate as a result. It doesn’t matter whether it is a credit card or refinancing an existing mortgage. The bank looks at age and income, but not assets. When I experienced a reluctance to let me change my mortgage and change my existing credit card, I struck back. They told me I wasn’t earning enough to pay a card (which is paid off in full every month) and that I didn’t have the income to support the loan (which I already have with them, albeit at a higher interest rate). I paid my loan down to where the bank is getting nothing. Before this they were paying nothing for the investments, I had with them, and I was paying interest on my loan. Not now. And I went with a Debit card rather than a credit card. Now I’m using them rather than being a good loyal customer. I don’t care that it now costs them to provide services I was happy to pay for.
Your points are well made. I have been with Westpac for many years with several extensive business and personal accounts.I now find that at nearly 80 I am cosidered ineligible to borrow money to replace my petrol guzzler motor vehicle for an EV
. I have a substantial SMSF from which I draw a regular monthly amount which would easily cover the repayments. I own my own home. Over many years have never been in arrears or late with a payment and have always replaced my cars each four or five years using bank finance.
In the current climate it is imprudent to take cash out of an SMSF which WBC seems to want us to do. I have also had the same issues trying to rearrange credit cards as your other subscribers. (fortunately Amex was much more accomodating.
Talking to people in the community in which I live nearly everybody has the same story.
I cannot see how these seniors are a serious credit risk. Most would be appalled to think that at this stage in life they would not meet their obligations.
I wonder that one of the newer fintechs has not spotted a very attractive business opportunity to lend to older people .
I have experienced the same issues with Westpac. I have had a credit card with them for over 20 years. There was a particularly attractive balance transfer offer available with St Georges Bank. This facility would have been very handy to get me through a jump in my credit card outstandings. I didn’t want to increase the limit, just transfer it to St George and use the flexibility of the balance transfer to spread out the payments. It was knocked back. For those who don’t know, St George is a subsidiary of Westpac so in reality, on a consolidated basis, the limit didn’t move anywhere but the balance transfer would have helped me to spread the repayments over a long time frame.
I only stay with Westpac because if I dumped my present card, I wouldn’t stand a chance of getting another one. Had a similar experience with ANZ and ME Bank. This despite the websites Finder and Canstar Blue informing me I have a credit score over 800, which is apparently excellent.
I have a similar problem.
I have been a St. George customer for over 30 years and never had a problem with the bank, I have 3 accounts with them plus one credit card and an allocated pension with Asgard. I used to pay my CC balance in full each month.
Because of the Covid pandemic I was stuck overseas from March 2019 till April 2022. During that time St George bank sent letters to my Australian address my credit card but I was unable to read them until April this year when I learnt that my card had been cancelled because it had not been activated. I explained to the bank that I had been stuck overseas but they would not reinstate my card, they said I would have to apply for a new one. When I applied for a new card they said I did not meet their criteria.
I asked AFCA to look into my case, which they did, but still no luck.
Age is highly likely to be a factor, I am 74 and am a self funded retiree, no employment income but quite sufficient income to maintain a credit card, no debts, own my own house, independent children etc.
After 30 plus years of being a thoroughly reliable customer You would think the bank would have more respect, more decency. Profit however would seem to be their sole motivation.
I will try to open a credit card with another institution (any suggestions anyone) and if successful I will transfer all my business away fro St. George.