Most major banks have an age limit of 60 for credit cards, and some also allow people up to the age of 70 to apply for one. This prevents many seniors from getting credit cards, even if they meet the income and credit score criteria. However, there are solutions.
A fixed deposit (FD) credit card is a safe option. Sumanta Mandal, founder of Technofino, an online platform that helps consumers compare and choose credit cards, said: “One option is to get a ‘secured’ card that is only issued against an FD. However, many seniors are unaware that most other credit cards, in addition to income criteria, also have an FD as one of the eligibility criteria that they can use. For example, you can get an HDFC Infinia card if you have one ₹5 lakh monthly income or by pledging a minimum of ₹10 lakh FD as lien.”
In addition to these guaranteed options, there is another way: using your long-term relationship with your bank. Read on for more information.
Cards against FDs
The structure of a credit card issued against an FD is simple: you usually get 70-80% of the FD amount as credit limit and the card remains valid as long as you pay the bills on time. If you default, the bank will break the FD, recover the outstanding amount and return the rest after closing the credit card.
A popular secured card generally offered to seniors is IDFC First Wow. It is a cashback card with relatively low rewards. However, the advantage is that it gives cashback on most categories except rental and fuel and gives 100% of the FD amount as credit limit. A more rewarding alternative that seniors can look into is the HDFC Millenia card.
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Seniors should choose a credit card that suits their lifestyle, says Adhil Shetty, CEO of BankBazaar.com. “A credit card with a low annual fee or no fees at all is ideal for seniors who prefer to keep their expenses low, but still want the benefits of a credit card. On the other hand, if you are an active senior who enjoys traveling, you may still want to consider a slightly more expensive travel or premium credit card that offers you both rewards and experiences. There are also cards specifically aimed at seniors that offer benefits such as medical discounts, lower costs or travel benefits.”
In terms of travel benefits, HDFC Infinia is a very rewarding card, but the maximum value can only be extracted if the cardholder travels frequently and transacts on HDFC Bank’s Smartbuy platform. Seniors should only choose this if they are willing to put in the extra effort for accelerated rewards and efficient transfer of points for airline miles and hotel points.
Take advantage of the banking relationship
The one major drawback to getting a secured credit card is that if you need your money urgently, it may take three to five days for it to reach your bank account because the bank will close the credit card before the FD is liquidated. You may also have to settle for a bank that offers a lower interest rate than others just to get a card.
That’s why Mandal recommends that seniors first try to obtain an unsecured card by leveraging their relationship with the bank. “Seniors should approach the bank where they have a pension or other income account, a demat account, deposits or a senior savings account. In most cases the bank will issue a card.”
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In such cases, the bank checks the account holder’s average balance or interest income to determine whether he or she can pay. “The most important consideration when approving credit cards is income stability. If the person has a regular source of income, such as a pension, rental income or interest income, the application has a better chance of being approved. A good credit score and a strong repayment history also increase the chances of approval for seniors,” Shetty said.
However, a disclaimer is in order here. This method typically works for applicants under 65 years old or up to 70 years old. “For people over 70, banks are reluctant to issue unsecured cards unless the senior’s total relationship value is several million,” says Mandal.
The only exception to this is American Express, which does not have a maximum age limit for any of its cards. “Amex looks at the applicant’s total assets and not just age or income. It checks investments, assets and all sources of income to assess the application,” Mandal said.
If none of these options work, a senior can get an additional card issued on their child’s credit card. It can be used to spend up to the credit limit, and the responsibility for repayment lies with the primary cardholder.
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