Over 190 million American adults use credit cards. Although you can always pay cash for your purchases, it’s a good idea to have at least one credit card in your wallet. Credit cards help establish your credit history, provide funds for emergency purchases or payments, and offer cash backs and rewards. For people who can pay their credit card payments in full and on time credit cards are wonderful to have. And it is just downright plain convenient to make payments, BUT sometimes it is too convenient and some people get into financial trouble because of this.
You need to meet certain requirements if you want to qualify for a credit card. One of the factors that influence your credit card eligibility is your income. What if you’re a student or currently unemployed? Do you have to have a job to get a credit card?
You don’t have to be employed to qualify for a credit card. However, you need to prove your ability to repay your debt. Let’s delve in!
How to Apply for a Credit Card with No Job?
Under the Credit CARD Act of 2009, credit card issuers need to evaluate if the applicant can repay any debt they may incur. Therefore, creditors give more weight to your income than your employment status. If you’re unemployed or still a student with no job, you can include any of the sources of income listed below on your credit card application.
If you’re at least 21 years, below are the types of income that will be considered:
- Social Security income
- Retirement account distributions
- Grants and scholarships (for students)
- Trust fund distributions
- Inheritance
- Savings account
- Alimony
- Income from partner or spouse
- Allowances
- Unemployment benefits
The Fair Credit Reporting Act made it more difficult for individuals below 21 years old with no job to apply for a credit card. Banks can only approve their application if they have an independent source of repaying their debt. If you’re younger than 21 years old, below are the types of income that will be considered.
- Personal income
- Grants and scholarships
- Allowances
You also have the option to apply for a student credit card. However, you’ll need to have a cosigner to be approved.
Although you can report any of these sources of income when you apply for a credit card, you need to remember that credit card issuers have different policies when assessing credit card applications. Some of them may accept any of the income sources listed below while others don’t.
How to Get a Credit Card with No Job?
If you don’t have a job and have limited or no income at all, there are a few options that can help increase your chances of getting approved for a credit card.
Use Someone Else’s Income
If you have a partner or a spouse and you have access to their income, you can list that on your credit card application. While you may be required to provide income tax returns and pay stubs as proof of income when you apply for personal loans, credit card issuers don’t typically require one, which is why many of them are able to approve applications in a matter of minutes. Even so, you should not lie about your income in your credit card application. Misleading banks by providing incorrect information may be considered bank fraud, which could put you in jail or require you to pay exorbitant fines if proven guilty.
Become an Authorized User
Ask a family member or a close friend who has an excellent credit card payment history if you can be an authorized user on their credit card. As an authorized user, you will receive your own card with your name on it. But the purchases you make will appear on the account of the primary credit card owner. This way, you don’t have to go through the application process. You can make small purchases using the card that you’ve been authorized to use and the liability to make payments fall on the primary owner of the card for which you should obviously reimburse.
Get a Joint Credit Card Account
You can also apply for a joint credit card account. You can ask your partner, spouse, or a close friend. In this type of credit card account, both of you can use the credit card and you’re both responsible to make payments. Visit PNC Bank, Bank of America, and U.S. Bank for more information about joint credit card accounts.
Apply for a Secured Credit Card
A secured credit card will require you to make a security deposit, which also serves as your credit limit. You can check out Citi Secured Mastercard, Self Visa Credit Card, and OpenSky Secured Visa Credit Card.
Can You Lie About Your Income on a Credit Card Application?
NO, YOU CAN’T. Lying about your income when applying for new credit is illegal. You’re committing a loan application fraud, and if you’re convicted of this crime, you can go to prison for 30 years or pay hefty fines of up to $1 million.
What are the Factors to Consider when Getting a Credit Card with No Job?
Can You Make Timely Payments?
Whether you’re unemployed or still a student, you have to carefully consider if you really need to have a credit card and if you can pay your debts later on. If you decide to apply for one, make sure that you can meet the minimum monthly payment for your credit card balance. If your budget is too tight, you may not be able to afford to repay your dues, which can negatively impact your credit score and make it more difficult to apply for new credit in the future. Not paying the due amount by the due date will also incur heavy financial penalties in terms of fees and high interests
Keep in mind that your credit card payment history will be reported to the major credit bureaus. You need to be sure that you can make timely payments to avoid the problems brought on by having a bad credit score.
Can You Afford the Interest Rates?
Credit cards typically carry an average interest rate of 17.87%, which is higher than the 9.41% average interest rate on a personal loan. You should honestly determine upfront if you can pay your credit balances in full every month so that you don’t end up with more debt because of the high-interest rate.
How to Build Your Credit if You Currently have an Insufficient Income?
You’re probably wondering how to get a credit card without an income or insufficient income? There are other options you may consider if your current income is insufficient to secure a credit card approval.
1. Get a Co-Signer
Ask your parent, spouse, or legal guardian to be a co-signer on your credit card application. Of course, they must fully understand what they’re getting into before they sign any document. As a co-signer, they will be legally responsible for paying your debt if you fail to pay back the loan as agreed. Not all credit card issuers allow a co-signer but some do like Bank of America’s Cash Rewards credit card.
2. Become an Authorized User
If you’re unable to secure a credit card because of insufficient income, you can ask a friend, spouse, or family member with a good payment history if you can become an authorized user of their credit card. If yes, you’ll receive a credit card that bears your name, but it’s still under the account of the primary user (friend, spouse, family member). You can make charges to the card but the primary account owner is responsible for making payments. Of course, you need to do your part. If you made the purchase, be responsible enough to pay the card owner for the charges you incurred.
3. Apply for a Secured Credit Card
If you’re unable to secure a credit card because of insufficient income, you can ask a friend, spouse, or family member with a good payment history if you can become an authorized user of their credit card. If yes, you’ll receive a credit card that bears your name, but it’s still under the account of the primary user (friend, spouse, family member). You can make charges to the card but the primary account owner is responsible for making payments. Of course, you need to do your part. If you made the purchase, be responsible enough to pay the card owner for the charges you incurred.
4. Get a Student Credit Card
If you’re a student and you don’t have a job, that doesn’t mean you can’t have a credit card. Banks have credit cards not only for employed people but for students too. You may find a credit card with no income student offers from Bank of America® Cash Rewards Credit Card for Students, Secured Mastercard® from Capital One, and Discover it® Student Cash Back. Student credit cards feature low fees and offer rewards programs. However, if you’re below 21 years old, you can’t get a student credit card on your own. You need a co-signer when you apply.
5. Get a Prepaid Credit Card
Enjoy the perks of a regular credit card without the hassle of going through the approval process and worrying if you have enough income by getting a prepaid credit card. As its name suggests, the card needs to be prepaid (load it with a certain amount) before use. The amount you load into the card will also be the amount you can spend when you make purchases. Examples of prepaid credit cards include PayPal Prepaid Mastercard, NetSpend Visa Prepaid Card, and Brinks Prepaid Mastercard. Unfortunately, prepaid cards aren’t reported to the major credit bureaus, which means they won’t affect your credit score. Although one inverse advantage is that they are also not subject to being garnished if you have payment defaults.
A Word of Caution
Always remember that you need to use your credit card responsibly if ever you get approved for one. How you use your credit card will have an impact on your credit score. Keep in mind that your credit score represents your financial health. Creditors and lenders will take it into account when you apply for a loan or a new credit card.
Employers and landlords will check your credit history too if you apply for a job or look for a new apartment. That’s why you have to protect your credit score by becoming a responsible borrower. Pay your bills on time and use your credit card only when necessary. Don’t use it to buy things that you know you can’t afford and don’t use it to make cash advances that you can’t pay back. Making minimum payments over a long period of time is just hiding your head in the sand as the penalties and high interest do not go away and can end up sinking you in a financial quagmire.
Conclusion
There are different ways to get a credit card if you’re a student or if you don’t have a job. If you’re unemployed, you can list your partner or spouse’s income, which you need to have access to, when you apply for a credit card. You can also become an authorized user or open a joint credit card account. If you have insufficient or no income at all, you can become an authorized user, get a co-signer, become an authorized user, or apply for a secured credit card. If you’re a student with no job, you can apply for a student credit card. However, if you’re a student who is below 21 years old, you’ll need a co-signer to secure higher chances of approval.
Final note. Please be careful and prudent as credit cards make it too convenient to spend and if left unchecked and not well managed they can lead you down the slippery road of financial disaster.
