One-size-fits-all approach to credit limits harms retirees

EVERYONE enjoys spending money, and if you've managed your money well there should be plenty to spend in your later years. 

So why do some financial institutions make it difficult for those no longer earning taxable income to increase the limits on their credit cards?

I recently received an email from a couple who are enjoying the fruits of a lifetime's work by spending money enjoying their retirement.  They were recently refused an increase on the credit limit from a card provider of 25 years.  They have around $1m in financial assets which provide adequate income, but apparently not in the eyes of the card provider.

The advice I received from one of the big four banks was that the automated system for assessing your limit, based on taxable income and level of debt, is bound by government legislation on consumer credit and responsible lending.  All well and good.

But a one size fits all model is not ideal when determining a person's ability to manage their credit card or other debt.  There is no question that legislation is necessary to reduce irresponsible lending, but if you have established a relationship with your bank, you would hope they could treat you as an individual and assess the risk based on your overall financial position.

As the population ages, consumers will have to demand that institutions such as banks keep pace with changing lifestyles.  As with any financial arrangement, if you're not satisfied with the service being offered by your bank or credit card provider, I suggest you shop around to find a company who can fit in with your needs.  If the question is asked "why are you closing your account?", make sure you answer honestly.

If you're a disciplined money manager, you could consider increasing credit card limits in your peak earning years.  Then, when you do retire, you'll have the freedom to spend your hard earned cash and plenty of time to spend it.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email:

Topics:  credit cards noel whittaker retirees retirement

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