Low income credit cards

Compare credit cards for people with a low income.

By   |   Verified by Yvonne Taylor   |   Updated 5th August 2022

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Comparing low income credit cards

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Having a low income does not prevent you from having a credit card, which is a convenient way to make in-store purchases, pay bills and shop online. Using a credit card responsibly is also one of the easiest ways to build a positive credit history and achieve a good credit score. Fortunately, some card issuers have made it easy to apply for a credit card even when your income is low.

Best types of credit card for low income earners

When your income is low it's more important than ever to extract the best value from your card for the lowest cost. You may want to consider a credit card with no annual fee — even though it may have no discounts or rewards — to keep your costs low. Sometimes, though, it's better to pay a small annual fee if you can get a card which gives store discounts or cash back that add up to more than the cost of the annual fee. It's even possible to get a cash back credit card with no annual fee.

Other benefits of credit cards

Aside from cash back and store discounts, many cards come with other free benefits attached, possibly including:

  • Purchase protection This cover protects items bought with the card against damage or theft within 90 days of purchase. You will need to file a police report in case of theft.
  • Return protection. Cover is activated when a merchant won’t accept returned items bought with your card, within 90 days of purchase.
  • Travel insurance. Some cards include a variety of insurance benefits when you use the card to pay for travel. You may be covered for accidents, trip interruption, delay or cancellation and lost luggage.
  • Reward points or travel miles. Instead of giving rewards as cash back into your account, some cards let you earn reward points or travel miles as you spend. You can redeem the points for gift cards or travel, or merchandise from a n online catalog.

Alternatives to a standard unsecured credit card

If you can't be approved for a credit card because your income is too low, there are other ways to make purchases without having to use cash:

  • Secured credit card. A standard credit card is unsecured. This means that when you use the card to make a purchase, the card issuer is giving you a temporary loan without asking for any collateral to secure the loan. But if you're unable to be approved for a normal credit card because your income is too low, you could still get a secured credit card if you can deposit some cash with the card issuer. For example, if you can deposit $500, you may be approved for a card with a $500 credit limit. The card issuer could use your deposit to repay the card balance if you fail to make repayments. The best way to use a secured credit card is to use it regularly, but only purchase what you can afford to repay each month. Your good financial behaviour will be reported to a credit bureau and your credit score will improve. In time, you could be approved for a standard unsecured credit card, and have your deposit refunded.
  • Debit card. A debit card is linked to your bank account. You use it in the same way as a credit card, but to spend your own money, not the bank's. Your spending is limited by the amount of money you have in your bank account, so you can't get into debt by spending more than you can repay. There is no annual fee to pay. But using a debit card will not improve your credit score, because there will be no report to a credit bureau.
  • Prepaid card. A prepaid card works in much the same way as a debit card, but instead of linking it to your bank account, you pre-load it with a fixed amount of cash. Once you have spent the amount on the card, you may be able to top it up with more cash. Like a credit card, it gives you the convenience of paying in-store and online with a card, but without the risk of getting into debt or the potential benefit of lifting your credit score.
  • Co-signer. You could apply for a credit card jointly with someone with a reasonable income who co-signs the application. Both of you will be individually responsible for repayment of the whole balance if the other fails to pay.
  • Buy Now Pay Later. Financial services such as Sezzle, Klarna, and Afterpay allow users to shop for any item they need without having to pay for it first. You can sign up for an account instantly at the checkout, in-store or online. Account holders are given options on how to pay back the money borrowed, which can be divided into several interest-free payments over a number of weeks. There is no formal credit or income check, and as time goes by and you continue to make your repayments on the due date, the amount you can spend in this way will increase. There are no annual fees or interest charges, but fees apply if you are late with your repayments.

Consumer Financial Protection Bureau

Thanks to the Consumer Financial Protection Bureau, it’s now more likely that someone with low income will be treated fairly when applying for a credit card. For example, card issuers cannot discriminate against you if you receive public assistance income.

Learn about low income credit cards

Get the info you need on applying for and using a credit card on a low income.

  • FAQs

  • Pros & cons

  • Tips

Are credit limits lower for people with lower income?

Yes, since your credit limit is partly determined by your income. However, this isn’t the only factor. Other factors include your debt-to-income ratio, your credit score, and if you’re just starting out with credit or are rebuilding your credit history.

Are Discover cards for poor people?

Not at all. In fact, Discover cards are a great option to take when you’re trying to rebuild your credit, since they offer low fees along with the benefits and rewards that other more expensive cards have.

Can I get a credit card for free?

Yes. Firstly, there's a wide choice of credit cards with no annual fee. Secondly, if you use your card responsibly, only buying what you can afford, not taking cash advances from the card, and always repaying the full balance on time each month, you will pay no interest charges, cash advance fees or late payment fees. The only additional fees you might pay are foreign transactions fees for buying goods online from a supplier based outside the United States.

Can I get a credit card with no income?

If you don’t have enough income to qualify on your own, don’t worry, because there are other options to get credit cards for people with no income:

  • Ask to be an authorized user on someone else’s credit card, as this is the most effective way to get a card without having to qualify for one. Of course, you will still have to pay back the amount of your purchases to the family member or friend who owns the account.
  • Look for someone who’s willing to be a co-signer, someone who has a good credit score and income who will jointly apply with you for a credit card. Both you and your co-signer will be legally responsible for repayment of any balance on the card, even though you may be the only one usually doing the purchasing and repaying.

Do I need a job to be approved?

While you don’t need to have a job to qualify for a credit card, you’ll need to be able to show that you have income. Income is a key factor in whether or not you get approved, so it’s best if you can show any kind of income. This could include Social Security payments, disability payments, alimony, child support or investment income.

Do people on state benefits qualify for a credit card?

Being unemployed won’t stop you from getting a credit card, as issuers are more interested in your income, rather than your job. They also look into your credit history, existing debt, and credit score. As long as you have a source of income, you’ll still be able to apply for a credit card.

How much income is considered low?

According to the Pew Research Center, nearly one-third of American adults (29%) live in low-income households, with the median income calculated to be $25,624 in 2016.

Is there a minimum amount of income required for any credit card?

The short answer is, not really. Since 2009, the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) placed new provisions to protect consumers by having no minimum income requirements. It does, however, prevent credit card issuers from approving accounts without assessing the applicant's ability to make repayments.

What proof of income is required?

In most cases, the card issuer will ask for proof of payment such as a pay stub or W-2. If you're getting interest from investments you may need to provide dividend statements, or statements from your retirement fund. Public assistance income will also be accompanied by some kind of statement you can use, and if all else fails you can use your bank statements to prove your income.

A convenient way to pay

The popularity of online shopping and bill payment means that you're almost certain to need a credit card, even if you have a low income. Although there are other ways to pay, a credit card is one of the most convenient. And by making use of the interest-free days and grace period which follow the date of your purchase, you are given time to pay without incurring any extra charges.

Credit score builder

Just because you have a low income, it doesn't mean that you are also certain to have a low credit score. A credit card is one of the simplest ways to get access to credit, and using credit responsibly, by always meeting your repayment obligations on time, is one of the best ways to build your credit score.

Credit score damage

Although using a credit card responsibly can help to improve your credit history and score, using it irresponsibly will lower your score, making it even more difficult for you to be approved for credit cards or loans in the future. So, steer clear of credit cards if you can't trust yourself to make on-time payments and avoid spending what you can't repay. Payment defaults are reported to credit bureaus and lower your score.

Fees and interest charges

Depending on how you use your card, it could cost you hundreds of dollars over the course of a year. Paying off the card balance in full by the payment due date will let you avoid paying interest at a high APR. If you you make a late payment, you’ll also be charged a fee, and there's also an annual fee to consider in may cases.

Rewards and benefits can help your budget

Many cards give you the ability to earn rewards, such as cash back, discounts, or points that can be exchanged for gift cards or merchandise. This can actually help to reduce your cost of living, as long as you use the card enough to cover the cost of any annual fee you may have to pay.

Safety features

These cards are much more secure than traditional checking methods. If someone gets a hold of your checking account, they can leave you dry. But if your card is stolen, you just need to ask your card issuer to cancel the card and issue a new one, and your liability is limited to $50, or in some cases zero. If someone commits a fraud using your card number, you're not liable if it's not your fault. Credit cards are in many ways safer than cash or checks.

Temptation to spend

If you have low income, you're likely to be on a tight budget. With a credit card in your pocket, you'll need to exert determination to stick to your budget and avoid the temptation to spend more than you can afford just because you have an instant loan in your pocket.

Check your credit score before you apply

Your income is only one of the features that card issuers will look at before deciding whether to approve or reject your application. The other factor that plays a big role is your credit score. To help you get an idea of where you stand, first check on your score by asking for it from one of the three credit bureaus: Equifax, Experian, and TransUnion. You're entitled to get a free copy of your credit report once in every 12 months from any of these agencies.

Do your research by comparing features of various cards

When you’re applying to get a credit card for the first time, or are looking to get another one, there are a few things you need to keep an eye on, even for low income cards:

  • High interest rate. This usually applies to high-risk users (such as those with a low income), so you can expect a higher APR which means you’ll be paying more in interest for your purchases if you can't repay the full balance by the end of the interest-free period.
  • Annual fee. Again, users with a low income are considered a higher risk by banks, so they may charge a higher annual fee to compensate. But you can still shop around for the lowest annual fee, and may be able to find a card with no annual fee.
  • Rewards. Who doesn’t love getting things for free? Depending on the card you get, you could be earning cash back, miles, and other freebies based on how much you use it.
  • Low credit limit. If you earn a low income, there’s a good chance that your credit limit will also be lower. However, could request an increase in your limit later, based on your good payment history or pay rise.

Provide complete and accurate details in your application

With your low income not acting in your favor, you need to eliminate any other problems in your application. This means providing full and accurate personal information (name, date of birth, contact details, Social Security number), details of your housing situation (homeowner, or renter, or living in someone else's house, and years at current address) and your annual income (pay slips or information about other income sources). Avoid the temptation to overstate your income, because you don't want to be allocated a credit limit amount that you couldn't afford to repay. And although it's unlikely that the bank will find out you've lied, lying in this situation is actually considered loan fraud.

Work on improving your credit score

To give yourself the best chance of approval on a low income, aim to have a credit score that is considered at least 'Good'. Equifax says that a score of 670 to 739 is good, and Experian defines it as 700 to 799. TransUnion says it's 661 to 720. You can improve your score with any of these bureaus by:

  • Paying your bills on time
  • Paying down any existing debt
  • Keeping balances on credit cards well below the credit limit
  • Not applying for many credit cards at once, because each credit score check by a lender will reduce your score slightly
  • Checking the annual free copy of your credit report for any errors which may be reducing your score, and asking for them to be fixed