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How low income credit cards work
Apply for a credit card, even with low or no income.
Our pick for a low income credit card
Green Dot primor® Mastercard® Gold Secured Credit Card
Low fixed interest rates with no penalty rate.
Why is income important?
Credit card providers want to make sure you can pay off your debt — that’s why income is one of the main factors they take into account. Any kind of income can do, including employment, unemployment benefits, social security, pension income, alimony and child support.
Having low income doesn’t mean you won’t be considered for a credit card approval. Other factors — including your debt, your credit score and credit history —will come into play. If approved, low income will likely affect the credit line you receive.
Are there low income credit cards?
Yes. The Consumer Financial Protection Bureau amended the Credit CARD Act to make it easier for stay-at-home spouses and partners to get credit cards. Card issuers can now consider third-party income if the applicant has access to that money — for instance, a stay-at-home spouse who has access to his or her spouse’s income. If this applies to you, you may list your spouse’s income on your application when applying for a credit card.
What should I look out for when applying for a credit card with low income?
Low income credit cards have their benefits but also their drawbacks. Keep an eye on:
- Annual fee. Because someone with a low income is considered a higher risk by banks, they will look to get as much money from you upfront in case you default on your monthly credit card payments. Watch out for credit cards with a high annual fee.
- High interest rate. Again, because you may be considered high risk, you can expect a higher APR, which means you’ll be paying more in interest on your purchases. Look for the lowest possible APR, but more importantly — pay your balance in full and on time.
- No frills features. Most cards that a low income earner will qualify for don’t offer extras such as rewards, access to concierge services, travel benefits and complimentary rental car insurance coverage.
- Low credit limit. If you earn a low income, your credit limit will also be low. By law, card issuers can only extend credit that the borrower can realistically repay. In some cases, you can request a credit limit increase.
Consider secured credit cards
If you are turned down during the application process, don’t lose hope. There are still options available to those with low income and poor credit. If you find yourself in this situation, consider applying for a secured credit card. Secured credit cards present a great opportunity to fix your credit history and build your credit score. With a low security deposit, you can start adding positive information to your credit history.
Every time you make a purchase, it will be charged against the credit limit, and you’re required to make at least the minimum payment each month. Your security deposit is held in case you default on your payments. Making your monthly payments on time and in full will begin to raise your credit score, which will allow you to qualify for a traditional credit card in the future.
How to choose a secured credit card
Choosing the right low-income credit card is important for making sure you end up with a card that will help you rebuild your credit score. Once you’ve reviewed your options, here’s what to take into account:
- Minimum security deposit. Look for a secured credit card with a low security deposit if you don’t have much money to put down.
- Maximum security deposit. Perhaps you have several thousand dollars and want a secured credit card with a large credit limit. In this case, look for a secured credit card that requires a high security deposit. Many limit the security deposit to $5,000, but there are a few that allow security deposits as high as $10,000.
- Annual fee. Annual fees are common with secured credit cards. As you compare secured credit cards, look for one with a low or no annual fee. This will lower the cost of having a secured credit card.
- Interest rate. Ideally, you will pay your balance in full each month. This is the best way to build a good credit score and avoid getting into debt. If there’s a chance you’ll carry a balance, however, choose a secured credit card with a low interest rate. You’ll pay less in finance charges if you have a low interest rate.
- Reporting to the major credit bureaus. The goal of having a secured credit card is to build a new credit history or to rebuild a bad credit history. Having a card that reports your account details to the major credit bureaus is a must. This way your payment history will be included in your credit report and will help improve your credit score.
- Upfront fees. The best secured credit cards do not charge any upfront fees. You’ll only have to pay your security deposit to receive your credit card. Tread carefully with any credit card that asks you to pay additional fees to get a credit card.
- The credit card issuer. Picking a secured credit card from a major credit card issuer is often a safe choice. Choose a secured credit card from a well-known, reputable credit card issuer to be sure you’re not falling for a scam.
Compare secured credit cards
This type of cards can be a solid option as a low income credit card. Just make sure you compare multiple cards until you find the best card for your financial needs.
Having a low income doesn’t have to stop you from getting a credit card. But if you keep getting declined for ones you want, consider a secured credit card to compare your other options.
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