So, you’re thinking about applying for a credit card, but you’re not sure if you earn enough to be approved. What do you need to know before you apply?
In this post, we’ll delve deep into low income credit cards to cover everything you need to know, including what sources of income card providers will accept, other eligibility criteria that will come into play, and what you can expect from your card. Want to earn rewards? We’ll also take a close look at what kind of rewards you can expect to earn on your low income credit card.
When you apply for a credit card, you need to meet certain eligibility criteria set out by the card provider in order to be approved. Why is that? A credit card is a lending product. When you use it, you are essentially taking out a loan from your card provider. Obviously, the card provider wants to know you have the financial capability to repay that ‘loan’.
It does this by making sure you meet certain standards, as set out in the card’s eligibility criteria. While each card’s criteria may vary slightly, most centre around the four following factors:
Okay, let’s circle back to income now. As you may have noticed when comparing credit cards, they come in all shapes and sizes. While some are as basic as it gets, others are packed with fancy features and rewards. On the basic end of the scale, credit limits tend to be lower, while higher end cards with more on offer typically have higher credit limits.
Obviously, card providers aren’t going to provide high credit limits to cardholders who can’t pay that spending back. Which is why these types of cards tend to set higher income requirements on application.
So, it goes without saying that there are also cards that have lower income requirements. They are the low income credit cards we are going to discuss in this post.
Q. What is a low income credit card?
A. A low income credit card is a card that sets a low income requirement on application. These cards can work well for people who want a credit card, but who don’t earn enough to apply for higher end cards with higher income requirements.
Time to check out some examples of low income credit cards.
How do those income requirements compare within the market? While most ‘standard’ credit cards set income requirements between $30,000 and $40,000 p.a., higher end cards may require applicants to bring in $75,000 or more each year.
As an example, the super premium American Express Platinum Card offers an extensive range of features alongside its high points earning potential. However, it also comes with an annual fee of $1,450 and an income requirement set at $100,000 p.a.
Q. What if there’s no minimum income stated?
A. If you’ve been checking out application requirements as you compare credit cards, you may have noticed that some cards don’t specify a minimum income within their eligibility criteria. So then, how do you know if you’re eligible to apply?
While some cards list a specific income requirement, doing so is not a legal requirement. With cards that don’t specify a minimum income, you may have to rely on other factors to give you an indication of whether or not you are eligible.
For example, you will usually find cards with higher minimum credit limits require applicants to have a higher minimum income. You may also find that higher end cards in general, tend to require a higher income from approved applicants.
If you’re unsure what the income requirement is on a particular card, you could contact the provider to ask for a rough idea of what is expected of you in terms of income.
It’s also worth bearing in mind that if a card doesn’t set a minimum income requirement, it may mean the provider places a heavier weighting on other aspects of its eligibility criteria, such as your assets and savings, existing debts and liabilities, and of course, your credit history.
Now we know more about what a minimum income requirement is and why card providers consider it important, let’s look at what may be accepted by providers as a suitable source of income. Bear in mind this list should be used as a general guide only. Each card provider has different criteria for acceptable sources of income.
|TIP: Self-employed? Read our post on how to apply for a credit card when you’re self-employed to find out what will be expected of you as a self-employed applicant, so you can improve your chances of being approved.|
While anyone with a low income may apply for a low income credit card, these cards can work well for particular types of applicants.
Let’s get down to the details. What do you need to apply for a low income credit card? In terms of eligibility, we have discussed that already. In short:
As you complete your application, you will be asked to provide details of your personal, financial and employment circumstances. You will need to detail your income, your outgoings, your assets and your liabilities. You will then need to provide the card provider with identity documents and paperwork to back up the information given within your application.
Before you apply, you may want to look out your driver’s license or passport, recent payslips and bank statements, and any evidence of alternate sources of income you rely on. It can be a good idea to work out a budget beforehand as well, as this should allow you to provide more accurate detail on your income and outgoings when you apply.
Q. Can you get approved for a low income card with bad credit?
A. If you have bad credit, you will find it hard to get approved for any type of credit card, regardless of whether it has a low minimum income requirement. Most card providers place a heavy weighing on credit score when determining whether or not to approve an application, so you may be better off taking a step back to improve your credit before you apply.
As you can see from the range available on CreditCard.com.au, there are many different types of credit card to be found within the dozens of cards currently on the market. So, what can you expect from a low income credit card?
At the top of this post, we created a list of credit cards with the lowest income requirements currently available. With stated income requirements ranging from $15,000 to $25,000, these cards tend towards the basic, providing cardholders access to credit, alongside standard features such as digital wallet compatibility.
But, while fancy features prove elusive, there are other benefits to choosing a low income card within this list.
What about rewards? Can you earn rewards on a card with a low minimum income requirement? Within that previous list, there were two card options that not only had a low income requirement, but also offered cardholders the opportunity to earn rewards.
Want more? If your income is slightly higher, you may have a few more rewards earning options available to you. Let’s take a look.
|TIP: While these cards have lower income requirements than some, it’s worth bearing in mind that rewards cards reward spending. If your lower income restricts the amount of spending you can do on the card, you may not earn enough points to make paying the annual fee worthwhile.|
Want to make the most of your low income card once you’ve been approved? Here are our top tips for keeping on top of your card, so it doesn’t get on top of you.
Founder of Creditcard.com.au. Roland has extensive knowledge about credit cards in Australia. Known as a credit card expert, he has been featured on tv and in various publications. Some popular offers on our site right now include the ANZ Low Rate. This special offer has no annual fee first year, a low purchase rate and long 0% balance transfer. Have a look also at the huge 0% for 30 months balance transfer from Citi with no balance transfer fees.
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