What is my income for the purposes of applying for a credit card?

Time4T_Accounts

Hi all
i retired a couple of years ago and am currently living off my pension tax-free amount - I choose to transfer a fixed amount each month to my current account (an amount that I consider to be my ‘income’).  My only “taxable income” then is an amount that I choose to take at the end of the tax year to fully utilise my personal tax allowance. If I consider my income to be the yield from my pension investments plus the interest on cash then I (like many, I guess), had a healthy income up until a couple of months ago.  So, a very variable income.  Added, I’m debt-free, and use a cashback credit card for the benefits and for the convenience.  And, being in drawdown, I am in complete control of my finances.  

Looking at MSE’s Best Reward Cards, if I wanted an Amex cashback card, what do I actually declare as my income?
Cheers!

D3xt3r5L4b

If you’re not employed then your income is technically zero. 

What does Amex state as being classed as “income”?

Malkytheheed

D3xt3r5L4b said:

If you’re not employed then your income is technically zero.

What absolute nonsense. 

I'm not employed and yet have at least 8 distinct income streams. 

etienneg

I would suggest you look at it this way. If you were to be asked to provide proof of the income you declared, would you be able to do so? Income from employment or pension will come with tax documents (P60), so is relatively easy. Otherwise, you would need documentation as for HMRC. I don't consider that you could claim increases in the value of a pension pot as income, as you aren't taking it whilst it remains in the pension pot. Otherwise everyone would have extra income throughout their lives as they build up their pension pot, including the years when they are too young to withdraw it, which is absurd! It becomes income when you take it, which is exactly the same as when it becomes taxable.

IrishSean

I declare child related benefits in my name and am asked to list total household income in soft searches. CTC & CB not taxable of course but you want to show ££ coming in, in the event you require a card.
In you case, I would suggest any money you draw to live on, taxed or otherwise: a small %% of which can then be assessed by the lender as available to pay CC.
If you declare zero income (as I would do for tax purposes alone), you're unlikely to be offered a card as you've no means to repay so that's a non-starter. 
Is there a precise answer? I'm not sure. 

digalumps

Your income is the gross amount of your pension plus the gross amount of your interest on cash deposits

Willing2Learn

Malkytheheed said:

D3xt3r5L4b said:

If you’re not employed then your income is technically zero.

What absolute nonsense. 

I'm not employed and yet have at least 8 distinct income streams. 

But for the purposes of a credit application, DWP benefits are classified as nil income by the prime market.  Sub-prime products are different as they will accept customers who are in receipt of state benefits. 

Time4T_Accounts

Thanks digalumps - but the definitional problem, for me, is what is my “pension”?  I treat it as the fixed amount I  currently ‘pay’ myself each month from my 25% tax free lump sum, but, in reality, I’m living off my investments.  

My original question is very much hypothetical, but I’m guessing that, as more and more people access their private pensions in this way, so, then, will more people want access to financial services in a way that differs from the traditional-income based model. 

I’ve been in the fortunate position all my life of never having been turned down for a financial product - but I can see that may be about to change ...

Thanks, all.

digalumps

For the purposes of a credit card application your pension income is the amount you take per year from your pension 

it doesn't matter if you take it from your tax-free lump sum or if it is a pension drawdown or indeed an annuity payment.

if you receive any of it tax paid then gross it up.

Since having got the card they do not require you to tell them of changes in your income so if you're applying for a card near to the beginning of a new tax year you might want to think about which year you are likely to have the most income in if that makes sense

D3xt3r5L4b

Malkytheheed said:

D3xt3r5L4b said:

If you’re not employed then your income is technically zero.

What absolute nonsense. 

I'm not employed and yet have at least 8 distinct income streams. 

Not at all.

Different lenders class (and indeed, allow and disallow) different sources to be classed as income (or not). 

enthusiasticsaver

I would think you should put the amount of your PA if that is the amount you drawdown each year.  Normally the purpose of credit cards asking for income is to determine the limit to give you.  Does AMEX require a certain level of income?