Recent banking reforms, initially aimed at curbing predatory lending, have inadvertently tightened credit access for many Australian seniors, leaving them struggling to navigate a rapidly digitising economy.
According to Chris Grice, CEO of National Seniors in an interview with ABC, this shift has resulted in a challenging “whack-a-mole” scenario where solving one issue often gives rise to another.
As these changes unfold, many Australian seniors find themselves without a credit rating and deemed “high risk,” making essential services such as car hire and hotel bookings unattainable.
With credit cards becoming harder to secure, especially in their post-retirement years, seniors are missing out on the conveniences of modern economic life—imagine needing to book a flight online to visit your grandchildren or secure a hotel room for a special family event, only to find your payment options limited.
This growing gap, highlighted in the ABC report, underscores a pressing need for solutions that accommodate the unique financial needs of older Australians.
The Growing Digital Divide and Its Effects on Seniors
As Australia moves towards becoming a cashless society and phasing out cheques by 2030, you might find yourself at a crossroads in adapting to new payment methods.
With cheques disappearing and cash transactions dwindling, mastering online banking or digital payment apps is essential, particularly if technology isn’t your strong suit.
Consider the simple act of paying for groceries or settling a café bill—increasingly, you’ll find that only digital payments are accepted.
This shift can be especially challenging since according to the NSA about 400,000 of the 500,000 personal cheques processed monthly in Australia are written by seniors, indicating a strong reliance on traditional banking methods among older Australians.
Research indicates that many older adults lack the digital skills necessary to effectively use online banking systems, leading to their social exclusion.
The eSafety Commissioner’s website highlights that numerous older Australians do not engage with the internet and perceive the digital society as not integral to their everyday lives.
This lack of engagement restricts their ability to perform essential tasks such as paying bills or shopping online, which are increasingly available only through digital channels.
Simple Steps for Seniors to Embrace Modern Financial Tech
Times are changing fast, and so is the way we handle money. It’s important for you to keep up so you can take care of things on your own and stay connected. Let’s look at how you can get comfortable with today’s financial tech.
Securing a Credit Card
- Understand Eligibility Requirements: Familiarise yourself with the requirements for obtaining a credit card, such as income thresholds and identification needs. Consulting with financial advisors at banks or credit unions can provide clarity and personalised advice.
- Explore Secured Credit Cards: If obtaining a standard credit card is challenging, consider a secured credit card. These cards require a cash deposit that serves as collateral against the credit limit and can help build or rebuild credit.
Increasing Credit Rating
- Regularly Check Credit Reports: Obtain a free credit report from major credit bureaus to check for inaccuracies or fraudulent activities. In Australia, individuals are entitled to one free report per year from agencies like Equifax, Experian, and Illion.
- Manage Credit Cards Wisely: Use credit cards for small purchases and pay the balance in full each month. This demonstrates reliable repayment behaviour and can positively impact credit scores.
- Diversify Credit Types: Having a mix of credit types, such as a retail account, mortgage, or personal loan, can improve a credit score as long as these are managed responsibly.
Adapting to Financial Technology
- Digital Literacy Workshops: Participate in workshops or classes designed for seniors to learn about digital tools and financial apps. Libraries, community centres, and organisations like the eSafety Commissioner often offer such programs.
- Practice with Assistance: Initially, practice using new technologies with the help of family members, friends, or volunteers who can provide one-on-one support.
- Use Trusted Financial Apps: Engage with well-known financial apps that have robust security measures in place. Start with basic functionalities like checking account balances or making transfers, and gradually move to more complex transactions.
General Tips
- Stay Informed: Keeping up with new technologies and financial products by reading trusted sources or attending informational sessions can help seniors stay current and make informed decisions.
- Seek Professional Advice: Consulting with financial advisors can provide insights tailored to individual financial situations and help navigate the complexities of credit and technology.
Reverse Mortgages: A Viable Alternative for Seniors
If you’re finding it tough to get a credit card because of recent banking changes, a Reverse Mortgage might be a smart choice for you. This type of loan lets you tap into the value of your home, giving you access to a credit line without the need for regular repayments.
Here’s how it works: a Reverse Mortgage allows you to borrow money against the equity you’ve built up in your home. You don’t have to pay it back regularly like a traditional loan. Instead, the loan is typically repaid when you sell your home, move out permanently, or pass away. This setup can offer you a lot of flexibility with your finances, especially if your income isn’t what it used to be.
You can use the money from a Reverse Mortgage for almost anything—whether it’s covering daily expenses, paying for medical care, or even funding a well-deserved holiday. It’s a way to keep your financial independence without the stress of monthly loan repayments.
Think of it as a safety net that lets you use the wealth you’ve worked hard to build in your own home. So, if you’re feeling pinched by the digital push in banking and the tough credit card applications, looking into a Reverse Mortgage could be a wise step.
Want to learn more about Reverse Mortgage? Find out more about how to use a Reverse Mortgage for debt consolidation or download your FREE REVERSE MORTGAGE GUIDE.
Ready to Apply? You can now check your eligibility online or call Seniors First on 1300 745 745.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial advisor before you make any decision.
