Most major banks have a cut-off age of 60 for credit cards, with a few allowing those up to 70 years of age to apply for one. This prevents many senior citizens from getting credit cards even if they fulfill the income and credit score criteria. However, there are workarounds.
A credit card against a fixed deposit (FD) is a sure-shot 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 senior citizens don’t know that most other credit cards, along with income criteria, also have pledging an FD as one of the eligibility criteria, which they can use. For instance, you can get an HDFC Infinia card if you have ₹5 lakh monthly income or by pledging a minimum of ₹10 lakh FD as lien.”
Apart from these guaranteed options, there’s another way – using your long-standing relationship with your bank. Read on to find out more.
Cards against FDs
The structure of a credit card issued against an FD is simple—you typically get 70-80% of the FD amount as the credit limit and the card remains valid so long as you pay the bills on time. If you default, the bank breaks the FD, recovers the outstanding amount, and returns the rest after closing the credit card.
A popular secured card that is generally pitched to seniors is IDFC First Wow. It is a cashback card with relatively low rewards. However, the upside is that it earns cashback on most categories, except rent and fuel, and gives 100% of the FD amount as credit limit. A more rewarding alternative that seniors can look at is the HDFC Millenia card.
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Senior citizens should choose a credit card that is attuned to their lifestyle, said Adhil Shetty, CEO, BankBazaar.com. “A credit card with a low annual fee or no fee at all is ideal for seniors who prefer to keep their expenses low but want the perks of a credit card. On the other hand, if you are a senior who is active and loves to travel, 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 fees, or travel perks.”
For travel benefits, HDFC Infinia is a highly rewarding card but the maximum value can be extracted from it only if the cardholder travels frequently and transacts on the HDFC Bank’s Smartbuy platform. Senior citizens should choose it only if they are willing to put in the extra effort for accelerated rewards and efficient transfer of points for air miles and hotel points.
Leverage bank relationship
The one big downside of getting a secured credit card is that if you need your money urgently, it may take three to five days to reach your bank account as the bank will close the credit card before liquidating the FD. Also, you may have to settle for a bank that offers a lower interest rate than others just to get a card.
Because of this, Mandal advises that seniors first try to get an unsecured card by using their relationship with the bank. “Senior citizens should approach the bank with which they have a pension or other income account, a demat account, deposits or senior citizens saving scheme account. In the majority of cases, the bank will issue a card.”
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In such cases, the bank will check the average balance or interest income of the account holder to determine their ability to pay. “The primary consideration for credit card approval is income stability. If the person has a regular source of income such as a pension, rental income, or interest earnings, their application will have a better chance of being approved. A good credit score and a strong repayment history also boosts the chances of approval for seniors,” said Shetty.
However, a disclaimer is in order here. This method typically works for applicants under 65 or at most 70 years of age. “For people above 70, banks hesitate to issue unsecured cards unless the total relationship value of the senior citizen is several millions,” said Mandal.
The one exception to this is American Express, which doesn’t have an upper age limit for any of its cards. “Amex looks at the overall net worth of the applicant and not just the age or income. It checks investments, assets and all income sources to assess the application,” said Mandal.
If none of these options work, a senior citizen can get an add-on card issued against their child’s credit card. It can be used to spend up to the credit limit, and responsibility for repayment lies with the primary cardholder.
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