Author Topic: Applying for a Credit Card after FI  (Read 3901 times)

Debbie M

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Applying for a Credit Card after FI
« on: October 11, 2013, 04:30:35 PM »
How do you apply for a credit card when you're done working and have no job?

The credit card application I'm looking at lets me choose an employment status called "Retired."  But what do I put for my total annual income?  If there's no pension, how do you pick a number?  Is this like the IRS where if you enter a round number they are less likely to trust you?  And if you enter only the amount you actually withdraw but it's tiny, will that look bad?

The application I'm looking at has a spot for employer, which I could fill in with n/a.

And they do ask the total balance of all bank accounts (with a max category of "More than $25,000") and the value of your investment accounts (which is where our income would come from) (with the highest category "More than $50,000").

It also asks if you own or rent (or other) your home and what the monthly rent or mortgage payment is.  With a paid-off house, I guess you have to put zero there.  (They do want your monthly income to be at least $475/month more than your rent/mortgage payment.)  But does zero look fishy to them?

Any hints on how to get accepted?

dragoncar

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Re: Applying for a Credit Card after FI
« Reply #1 on: October 11, 2013, 04:46:10 PM »
I don't think they really care that much as long as you have good credit.  They don't verify income... I got some large credit lines when I was a student with almost no income but a good fico.

Another Reader

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Re: Applying for a Credit Card after FI
« Reply #2 on: October 11, 2013, 06:36:14 PM »
My mortgage broker told me to never, ever put retired on a credit application.  The underwriters will apply a much more rigorous analysis of your income.  A different set of assumptions applies and you will be relegated to the low end of the credit world for credit cards and lines of credit.  Creditors like people whose incomes are growing faster than inflation.  They will buy more stuff and be more profitable.  Increasing income is more protection for the creditor.  Retired folks are perceived to have stagnant or declining income.  Heck, they might die and leave an unpaid balance.

If the questions on the application use the ranges you describe, that may be a low quality card, designed for people of modest means and marginal credit.  Does this card have some rewards or other benefits?  If not, in your shoes I would wait for something better.

randymarsh

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Re: Applying for a Credit Card after FI
« Reply #3 on: October 11, 2013, 07:44:32 PM »
CC apps seem to be almost completely un-verified. I routinely put down my student status and $0 monthly rent/mortgage payment (live with parents) and household income (round number). With a decent FICO, I have no problems getting approved for most cards.

I would put down N/A for employer or "Other" if available. For income, maybe 4% of your portfolio? Or honestly whatever you could reasonably withdraw in a year. Worst case is they ask for proof (99% they won't), you give last year's tax return and they use that number. AMEX is known for doing financial reviews when you request high credit limits where they want actual proof.

Debbie M

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Re: Applying for a Credit Card after FI
« Reply #4 on: October 11, 2013, 08:03:37 PM »
Interesting.  Maybe as a student, lenders can easily assume an increasing income and they don't bother to look closely at your current income because there's a fair chance your parents might chip in if necessary, but as a retired person things would look worse to them.

@Another Reader, I agree those ranges sound low.  But I have good credit and googling shows it is only offered to people with good credit.  It's the Capital One Quicksilver, your basic no-annual-fee highish-interest-rate rewards card.  It gives you 1.5% cash back on everything.  It sounds better than my current Chase Freedom card which gives you 1% on everything except for 5% on a revolving set of categories.  (Actually, because I also have a Chase checking account, I get 1.1% + 10 cents per charge + the extra 4% on revolving categories.  I still calculate that I've averaged 1.4% this year.)

Melody

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Re: Applying for a Credit Card after FI
« Reply #5 on: October 11, 2013, 08:57:47 PM »
Just put down whatever you put on your last tax return... (assuming you were retired for the year to which the tax return relates.) Or if this wasn't the case, work out your taxable income year to date and extrapolate it for the year. That's how you handle these things if your self employed, so it would make sense this should work for a retiree.

footenote

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Re: Applying for a Credit Card after FI
« Reply #6 on: October 12, 2013, 07:19:12 AM »
Just put down whatever you put on your last tax return... (assuming you were retired for the year to which the tax return relates.) Or if this wasn't the case, work out your taxable income year to date and extrapolate it for the year. That's how you handle these things if your self employed, so it would make sense this should work for a retiree.
Just say "self-employed" and roughly estimate the "income" upon which you are retired.

aj_yooper

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Re: Applying for a Credit Card after FI
« Reply #7 on: October 12, 2013, 04:00:37 PM »
Say self-employed.

Not on topic, but ...

The Fidelity American Express card gives 2% cash back if you set up a Fidelity account.  No fee.

Debbie M

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Re: Applying for a Credit Card after FI
« Reply #8 on: October 12, 2013, 04:06:39 PM »
Thanks all.

aj_, I've thought about that, but don't want another account or to worry about where AmEx is accepted.

I'm going to say I'm self-employed [I'm an investor--yeah, that's it], so my employer is n/a.  I'm going to say I'm making 25K, which isn't too scary low for a single person with no mortgage and which I could also afford, though I'll probably spend less than 19K.  I won't worry about using a round number for the income.

(In my case, I'm going to be living off my savings and Roth IRA contributions until I start collecting my pension in three years, so most of it's not taxable--and 4% of my investments, ~6K, is too low a figure to use.  Last year I made 42K at multiple jobs; this year it will probably end up being a little more than half that.)
« Last Edit: October 12, 2013, 04:30:50 PM by Debbie M »

LauraG

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Re: Applying for a Credit Card after FI
« Reply #9 on: October 12, 2013, 04:43:24 PM »
My gross income from my job is usually a round number (b/c that's the way my boss rolls) and I've never had a problem with credit applications.