Low Income Credit Cards

What is a low income credit card?

Low income credit cards can provide lower-salary earners with access to credit. With these cards, card providers tend to be more lenient, allowing applicants to be approved even if they have lower annual earnings. While other eligibility requirements must be met, you could be approved for one of these cards with annual earnings under $25,000.

Why would you choose a low income credit card?

First and foremost, a low income credit card provides access to credit. Helping to ease your cashflow, a credit card can help you cover purchases that you may not be able to pay for upfront, and then pay them off before interest starts accruing.

Having a low income credit card could also help you build your credit. If you have a few blips on your credit file, you might be hoping to rebuild your credit by acting responsibly. Credit cards help to do that, as long as you spend within your means, and clear your credit card balance each month so you don't have any debt.

Of course, you might be looking for a low income credit card because you have no other option with other types of credit cards. You might not get all the rewards and perks of other types of credit cards, but a low income card can still give you the chance to build a credit score, keep for emergencies and use for little day-to-day purchases when needed.

Can I get a low income credit card?

Credit card providers set out eligibility criteria that you have to meet to be approved. They're assessing if you're a risk and worthy of being loaned money...their money. They want to make sure you can repay it.

You'll usually need to prove your:

• Credit history: The bank will do this by looking at your credit score. You need to have a score of at least 622 to be eligible for a credit card in Australia, and the higher the better for your chances of approval.
• Residency Status: Many card providers only accept applications from Australian citizens and permanent residents, with a handful accepting certain temporary visas.
• Income: You'll need to prove your income and your expenses. If you generally spend more than you make, your chances of a decline are probably high.
• Employment: Some card providers accept all kinds of income including government pensions, while others require that you have a PAYG income or are self-employed.

Credit cards can be simple or packed with fancy features (which will always have higher annual fees and require a higher income). So, if you're looking at a card suited for low income earners, you're looking at a simple card without the bells and whistles.

The Bankwest Breeze Mastercard is a fairly basic card with a low standard annual fee and a low ongoing purchase rate. It currently offers 0% p.a. on balance transfers for 24 months with 3% balance transfer fee. This card has no minimum income requirement.

Within the St.George range of credit cards, the St.George Vertigo Credit Card and the St.George Vertigo Credit Card – Cashback Offer have no minimum income requirements. Both cards come with a low annual fee of $55 and an ongoing interest rate of just 13.99% p.a.

The ANZ Low Rate Credit Card – Cashback Offer is another basic option, featuring a relatively low purchase rate and annual fee. No minimum income is required to be eligible to apply for this card.

The Westpac Low Rate Credit Card and Westpac Low Rate Credit Card – Cashback Offer, have relatively low purchase rates of 13.74% and a $59 annual fee. These cards have an income requirement of $30,000 p.a.

What does a low income credit card have to offer?

• Lower minimum income requirements: A low income credit card is designed for applicants who have a lower annual income. If you have an annual income between $15,000 and $25,000, you might be approved for a low income credit card.
• Low annual fee: Low income credit cards tend to have low annual fees. This can help you to save money year-to-year, but usually come with fewer features. Keep an eye out for promotional $0 annual fee introductory offers, but be aware of what the standard annual fee is, and make sure it’s affordable.
• Lower interest rates: If you think you may not be able to clear your balance each month, comparing cards for one with a low interest rate could offer more savings in the long run.
• Low credit limits: When you apply for a credit card, the card provider determines how much credit they'll let you use each month. This is your credit limit. If you have a lower income, it's likely your credit limit will be lower. But, this can help to avoid spending more than you can afford, by keeping a manageable limit on your spending.
• Interest-free days: Most credit cards offer interest-free days on purchases, though the number of days will depend on the card. To take advantage of interest-free days, you usually have to clear your balance each month.
• Basic features: For the most part, low income credit cards are pretty basic. In general, low cost cards are no frills. That means it's unlikely you'll find a low income credit card with perks like a rewards program, insurance covers, or a personal concierge service. However, if you're trying to save money and simply want access to credit, it's a pretty good trade-off.

What Counts Towards that Minimum Income?

Every card provider has different criteria for acceptable sources of income, so the following list is just a guide.

Pros and cons of low income credit cards

Pros

• Offers access to credit, even to cardholders with low income
• Allows cardholders to build their credit
• May offer low annual fees
• May offer low interest
• Lower credit limits reduce the opportunity to get into trouble with debt
• Access to basic credit card features

Cons

• Tend to be basic, not many fancy features on offer
• Rare to find rewards programs

How to improve your chances of approval

Thinking about applying for a low income credit card? You may be able to improve your chances of approval by doing the following:

• Get your finances in order: Know where you stand financially. This includes getting your debts in order. If you have any default listings on your credit file, these will likely have to be paid before you can apply for a credit card. You can apply for a copy of your credit file for free from one of the major credit reporting agencies.
• Start saving by opening a savings account: By creating a history of banking with the provider, you may be able to improve your status as a valued customer.
• Pay down debts: If you have debts, it can help to pay them down as much as possible before you apply for a new card. By lowering your existing debt, you can make yourself seem less of a risk to your potential card provider, while also showing off your ability to be a responsible borrower.
• Include all sources of income: Have a good think about all the money coming into your household. Your income can include more than just your paycheque. It may also include any freelance work you do, or any government payments. Be sure to include this information on your application.
• Be honest: Above all, be honest. The card provider can cross-reference your details, so there is no point lying simply because you think it will get your application approved.

How much do low income credit cards cost?

Want to know whether you can afford to keep a low income credit card in your wallet? How much your credit card costs you will depend on the card you choose, and the way in which you use it.

• Annual fees: Unless you choose a low income credit card with no annual fee, you will pay an annual fee each year you keep the account open. By choosing a card with a low annual fee, you can help keep costs down.
• Purchase rate: This is the standard interest rate that's applied to purchases made on the card. As long as you clear your balance by the due date each month, you won't have to worry about interest. If you carry a balance on your card, interest will start accruing.
• Cash advance rate: This is the standard interest rate that's applied to cash advance transactions, such as ATM withdrawals. This rate is typically higher than the purchase rate, and is usually applied from the day you make the transaction. Fees may also apply, so it's best to avoid this type of transaction whenever possible.
• Cash advance fee: When you use your credit card for a cash advance transaction, the card provider may charge you a cash advance fee of around 2% to 3% of the total transaction amount.
• Foreign transaction fees: Using your card to make purchases in foreign currencies – for example, if you travel overseas or use your card online at overseas merchants – will usually attract a foreign transaction fee. This fee is usually between 2% and 4% of the total transaction.
• Other fees: Depending on the card, there may be other fees that apply, such as late payment fees. Check the credit card’s product disclosure statement (PDS) for fee details, so that you can factor in all the costs before you apply for a card.

Who Do These Cards Work Best For?

While anyone with a low income may apply for a low income credit card, these cards can work well for particular types of applicants.

• Students on a low income while they study.
• Part Time or Casual Workers.
• Self-Employed workers that are starting out or have seasonal income.
• Retirees on superannuation or pension payments.
• Centrelink Applicants on government payments.

What should you consider when comparing low income credit cards?

Comparing credit card options can be tricky. Not only do you have to think about what the card has to offer and how much it could potentially cost you to keep in your wallet, you also have to think about what is expected of you if you are to be approved.

• Your credit history: One of the most important factors to determine the success – or rejection – of your credit card application is your credit history. If you have a poor credit history, you may find it hard to get approved for credit. If you do get approved for a credit card, use the opportunity to build your credit by making repayments on time and spending wisely.
• Your income: Of course, you need to look at the minimum income requirement on the card before you apply. Make sure that you have all of the necessary documents to prove your annual income before you apply.
• Your ability to repay: Applying for a credit card you can’t afford is not a great idea. Think about how much you want to pay in annual fees, and if you think you might carry a balance, choose a card with a low purchase rate.
• Your employment status: Your job status tells credit card providers whether you'll have the means to repay any outstanding balance you accumulate. An unstable job history is a red flag for providers that you might not be able to pay back your credit debt, making you high-risk.

If you don’t meet the minimum income requirement, you may still have alternative options. You may be able to pool your earnings with your partner, to then apply for a credit card in joint names. Take note, not all providers allow for this. They may require an application from the primary cardholder (who meets all eligibility requirements), and then an additional cardholder can be added to the account.

How to compare low income credit cards

Choosing a credit card can take time. No matter what type of credit card you want, you need to know what to look for – as well as what you need from your card. First up, consider your individual circumstances. What do you need a credit card for? How often will you use it? Will you be able to clear the balance month-to-month?

This should help you narrow your search. If you want to keep a credit card for emergencies, one with no annual fee could be a good option. If you will clear the balance each month, you may consider a card with perks and rewards. If you want to save on interest and think you may carry a balance, a low rate card could be the best option for you.