Do this before you retire (so the banks don’t turn you away)

With big banks having shifted their focus to the younger generation (and mortgages), the biggest losers are Baby Boomers who have paid off their homes and debts before retiring, often having worked lo

Most people don’t realise that when they pay down their debts and say farewell to their salary, they suddenly become the country’s most unappealing customers to the big four, and will probably no longer be able to access key banking products such as loans and credit cards. They also certainly won’t be lured in with the highest-interest bank accounts and other perks and benefits offered to younger customers.

Most people think their bank will always be there to offer them credit cards, loans and good interest rates on their savings – especially if they own their home outright and have hundreds of thousands (or millions) of dollars in investments.

But that’s not always the case. The banks generally don’t care how much money you have; lending is their priority. And when they lend, the only thing they care about is whether you can service the debt using the guidelines in their systems. That is, they want you to have a pay-as-you-go income that their credit department understands.

Superannuation and investment incomes are not as stable, so the big banks don’t like them and won’t usually lend against them. And you can’t just call up your bank manager to approve a new loan or credit card – they don’t have that power. Every application for credit goes through a standardised credit approval process, and the first question is “what is your income?”.

Read the rest of the article on the Australian Financial Review here.