For some reason, I can't seem to find an answer to this question despite a lot of searching on the web. Is my Google Fu weak?

So, the question is, once someone is retired and no longer working, can they get new credit? Specifically, I'm thinking of a new credit card.

Common sense seems to imply that it's obvious that "no income" = "no new credit" but banks don't seem to operate under common sense rules anymore so I need to double check for someone.

This person has hit a rough patch due to the economy and is considering using a "0% APR for 12 months" balance transfer to save on interest charges. And in the meantime, he anticipates that he'll have to retire due to his health before that year is up but will try to pay that balance off before then. Realistically, though, it's not unreasonable to assume that he'll still have a sizable balance before that year is up, so I'm trying to help him anticipate what his options are if he gets to that point. A person who is still working could look for a second balance transfer to give him more time to pay it off, but I had never considered the case where the person just retired so I'm not sure if that option is available to him.

Because if he won't be able to get that second balance transfer because he has retired, then I think he could very well be better off not doing the first balance transfer at all since he'll be hit with sky high interest rates at the end of the 12 months and in the end, may end up on the hook for even more in interest payments.

What is this word "retired" you keep using?

-Blast

@Blast: I'm on the "Freedom 85" retirement plan myself. :-)

@Arney:

I really question a plan that involves hopping from credit card to credit card. That's like fending off circling sharks with a broom handle.

IMO, this person needs to consolidate and control debt while they are still working and have a cash flow to demonstrate to a reputable lender.

If I were in this fix, I would swallow my pride and get the help of a credit counselling service. Some are not-for-profit, and can help immensely with the big picture, suggesting options and even helping negotiate better deals with creditors.

Best of luck.

Does anyone know the answer to my question?

With credit card legislation being hashed out now, there are a lot of interesting news articles out there about the industry now. The industry and our use of cards could look quite different a couple years down the road.

Here's one that I was just reading:
"Credit card industry aims to profit from sterling payers"

Check the news, the Senate just today passed a bill changing some of the fundamental ways that credit card issuers will be allowed to work. The House is expected to pass it and the President is expected to sign it with the week.

It gives credit card issuers 9 months to change their ways, I would expect some very serious upheaval in the consumer credit card business in the next year.

As for your friend, will they have any reportable income? If so, and they can prove it, they should be able to get credit assuming that they're otherwise a good risk.

If they're a member of a credit union perhaps they could look into a "signature loan" to pay off the credit card debt?

A friend of mine just sold her house, she is retired and lives on investments and social security, she was able to get financing on a new home and a motor home based on her reportable income and she hasn't worked since 2005. Of course these were both secured debts.

JohnE

I'll jump in here.

Not very likely. The "credit crunch" is just about to get real, you ain't seen nothing yet.

i believe someone retired certainly can get a credit card. If a person has a good credit rating then they will probably qualify.

And not having a job does not equal no income. plenty of retirees have income - everyone has social security and 75-80% of the population has assets and income beyond just social security benefits.

Kind of mixed answers. Tomfaranda--I agree with your logic, although I needed to confirm with some real world experience. As I mentioned in my original post, what seems logical to you and me is not necessarily the same rules that the banks play by.

Oh, by the way, my friend is not yet eligible for Social Security if he's forced to retire within a year. Hmmm, I guess he'll be eligible to start withdrawing from his retirement account.

I noted with interest one provision of the Senate legislation passed yesterday--the requirement that the banks apply payments to balances with the highest interest rates first, rather than the usual practice of applying it to the lowest rate first. That is always a big "Gotcha!" to the unaware when they do balance transfers.

If you do a balance transfer to a new card, just don't put anything else on that card until it is paid off! Any new purchases on that card will be charged interest and minimum finance charges until the balance transfer balance is fully paid off because all your payments are going towards paying down the low rate balance transfer amount first. If this change makes it to the final bill signed by the President, then people can actually pay off the amounts that are generating interest charges before paying off the low interest balance.

That could spell the end of the sweet "0% APR for 12 months" deals. Probably not completely disappear, but likely that 0% part will be some higher amount or the grace period significantly shortened. I'm sure that they'll come up with new ways to fleece the unwary.

Doug,

I personally am on the "Freedom 95" plan. Seems only Canucks get that reference to the London Life Freedom 55 Life Insurance plan. Never really looked into it but have several friends who bought into it. Some of them are approaching 50, have to ask how its going?

Thanks, Mike. At least one nibble at my hook. To translate for you Americans, "Freedom 85/95" is black humour, a joke commonly bandied by Canadians who don't have a fat company/government pension plan. I'm pretty sure my bad habits will catch up with me before it's time to collect, when I stop working (at age 85/95). :-)

No offense to the OP. I wouldn't want to make light of anyone's plight. I know a few people in the same pickle. Friends can offer a supportive ear, but it's tough love any way you cut it, IMO.

No one can retire without income unless they'll be living under a bridge. Even begging is income.

If someone is retiring, they often own their own home, or at least a large portion of it. Credit card companies LOVE people who own their own homes.

Loved. Past tense. Loved.

http://money.cnn.com/2009/02/25/real_estate/boomer_wealth_evaporating/

"So much home equity has been lost that 30% of boomers, aged 45 to 54, are underwater in their homes, according to "The Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble. " The report, released by D.C.-based think tank the Center for Economic and Policy Research, also found that 18% of boomers aged 55 to 64 would owe money at close if they sold their homes."

If you owe X on a Y mortgage and X>Y, and your savings are less than your mortgage - guess what? You're worthless to the credit card companies.

Look, I see the application data in real time, I see the approval rates too. I know what I'm talking about. You need income and assets to get credit now. Just like 1985 all over again.