This guide outlines the approaches and strategies for how to get a credit card when you are not a high income earner or perhaps have a small single income.
Traditionally, far fewer requirements are placed upon the credit card holders than on the applicants for a regular loan, so getting them is much easier, especially when it comes to small amounts. Moreover, many large banks are focused on issuing as many credit cards as possible. When applying to these banks, the chances of getting a credit card (online application!) are much higher.
In addition, you should pay attention to small regional banks. They are interested in getting as many loyal customers as possible, so they give out credit cards even to the people with bad credit history or debts (naturally, for a smaller sum and at higher interest rates).
Speaking of a credit card with a small limit, it can be obtained even without confirming your solvency. However, if you need premium class credit cards with an increased limit, a long grace period and various bonuses in the form of a cashback, prize miles, etc., you will have to bring to the bank a full package of documents confirming your employment and sufficient income.
It is better to get best credit cards for low income earners from a payroll bank, as your financial history will be visible to the employees, and regular customers are more loyal. Therefore, the chances of getting a promised card will be higher even if you are in the so-called “risk zone”.
How to get a credit card when I don’t have official income
By default, the maximum amount of a credit card limit is two borrower’s salaries. The initial amount of funds on cards issued by most banks ranges from $500. There are instant credit cards with a limit of only $200.
For such cards, the lack of income is not a decisive factor. Most banks will be happy to give you credit cards for low income, even if you don’t provide evidence of your employment, but only subject to certain conditions:
- you have no current loans;
- you don’t have active credit cards of other banks;
- you have a crystal clear credit history.
Do they give credit cards to pensioners, women with a low income leave and handicapped persons?
Banks have unspoken lists of borrowers from the “risk group”. These are the most socially disadvantaged sections of the population that usually include:
- pensioners;
- non-working persons of pre-retirement age;
- pregnant women or those on maternity leave;
- single mothers or fathers;
- students with no work experience.
It is difficult for them to get a regular loan, but the banks treat fairly loyally when issuing credit cards for people with no credit and low income. Especially since the main factor when considering the application is not the social position of the potential cardholder, but his/her income.
Thus, a working pensioner can get a fairly expensive credit card, since he has two sources of income at once; a woman engaged in business and caring for a newborn child won’t lose her source of income overnight; working disabled person receives additional payments from the state, etc.
Thus, the main thing is to prove that the applicant has an income that allows him to meet his obligations, and the social situation will not have a significant impact on the likelihood of approval.
The only exception is retirees and the disabled, as the bank will not discard the risk of the borrower’s death or a dramatic deterioration in his health. The way out may be to provide a health certificate (although most banks don’t request it for ethical reasons) or insurance. In addition, you can always ask for your nearest relative’s credit card and give it to you.
How to get a credit card?
Currently, it is easy to find many offers for a credit card. In some cases, it may be advantageous, in others it is hardly worth using such offers. A card with a credit limit is little different from a regular bank loan. However, there are some important differences, such as:
- It is much easier to get a credit card with a poor (and sometimes frankly bad) credit history than a cash loan (especially if the borrower has a stable source of income);
- Credit card interest rates are usually 1.5-2 times higher than consumer credit rates; however, a disciplined credit card user can do without paying interest — it is enough to choose a card with a grace period, and carefully observe the terms of the loan agreement, preventing late payments;
- A regular debit card can become a credit card.
In the latter case, there are two options: 1) the cardholder submits an application, and the bank gives him access to the credit limit for a certain amount; 2) when making a debit card, the borrower should ask about the availability of the overdraft function. This means that the credit institution provides the client with borrowed funds in the absence or lack of own funds on the card. The borrower must return them to the card in due time.
When making a credit card, the prospective borrower should be clearly aware of how he/she is going to use this payment instrument. Credit card ownership implies strict compliance with the financial discipline, because if you don’t return the money taken from the card on time, penalties will be charged, which will entail additional costs and lead to a decrease in the level of solvency and deterioration of credit history.
In most cases, bankcards are intended solely for making non-cash transactions. If you plan to use cash, when choosing a credit card you should pay attention to the possibility of withdrawing cash without commission. Otherwise, you will have to pay a lot for withdrawing money.
Credit cards disadvantage
The main disadvantage is that not all existing debts can be properly eliminated. A small amount of credit can certainly change the situation, but the repayment period should also be longer to allow the unemployed person to fully cope with their debts.
In addition, the lender assumes great risk, since there is no guarantee that the applicant will want to find another job. As a result, the interest rates high enough, so that there will be a lot of unpaid interest throughout the loan period. Of course, getting a loan without a job is not easy, so a compromise will be acceptable.
Where to get a credit card?
Nowadays, the best way to take a loan is to contact online lenders that offer better terms. Of course, when looking for unsecured loans for the unemployed, online lenders can set more competitive interest rates.
When obtaining credit approval, especially when the applicant has no employment form, the compromise that must be made is to protect the creditors from losses. From a borrower’s perspective, access to vital financial resources is paramount, so it’s worth additional costs.
These unsecured low income credit for unemployed persons can be expensive, but the pressure to manage debts in the absence of regular income will sharply decrease.
