Low Income Credit Cards

Updated 14 May 2019

When comparing credit cards, you may have noticed that many card providers include a minimum income in their eligibility requirements. This may be $35,000 per year, $50,000 per year, or for platinum cards, as much as $75,000 per year. If you don’t meet these minimum income requirements, then it’s more than likely your application will be rejected.

So, what can you do if you have a low income but still need access to credit? One solution could be a low income credit card. Designed specifically for low income earners, these cards have a low minimum income requirement, so even if you don’t take in that much each year, you may still enjoy access to credit, as long as you meet the card’s other eligibility requirements.

ANZ First Card

ANZ First Card

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Westpac Low Rate credit card

Westpac Low Rate credit card

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Bank of Melbourne Vertigo Credit Card

Bank of Melbourne Vertigo Credit Card

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BankSA Vertigo Credit Card

BankSA Vertigo Credit Card

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St.George Vertigo Credit Card – Online Exclusive

St.George Vertigo Credit Card – Online Exclusive

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ANZ Low Rate Credit Card

ANZ Low Rate Credit Card

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Why do you need to provide your income when applying?

When you apply for credit – whether that’s a credit card, personal loan, home loan or any other form of credit – the provider needs to know you’ll be able to pay back any money you borrow. One way they may check this is by assessing your credit history. This tells the provider how well – or badly – you may have dealt with credit in the past.

The provider will usually check your employment status as well, alongside your income. This tells them whether you will have the means to repay any outstanding balance you accumulate. If you have a chequered job history, or you have a low income, it may suggest to the provider that you would be unable to pay back the credit they provide, so you would be too risky to lend to.

What is a low income credit card?

Low income credit cards can provide low income 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?

There are plenty of reasons why you may choose to apply for 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, to 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 may want to start rebuilding your credit by acting responsibly. You may be able to do this by using your card, not spending more than you can afford to pay back, and by clearing your balance each month by the due date.

Of course, you may choose a low income credit card because you have no other option. With your lower income, you may not be able to get approved for any other type of credit card. However, a low income credit card may still provide you with a credit card, that you can use day-to-day, or keep for emergencies should you need it.

What does a low income credit card have to offer?

  • Lower minimum income requirements: As we mentioned – and as its name suggests – 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 may find approval in 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 it should be noted that because these cards have lower annual fees, you will usually find they have fewer features as well. 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: While some low income credit cards have high purchase rates, you may find a suitable option with a lower purchase rate. If you think you may not be able to clear your balance each month, a card with a low purchase 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 to extend to you. This is your credit limit. As 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 this feature, 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, this is no bad thing.

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.
  • Apply as a joint applicant: If your income is too low to apply for a credit card, you may be able to apply jointly with another person, such as your spouse. This allows both of your finances to be assessed by the credit card provider during the application process.
  • 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.

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.

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.

 

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.

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 may 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.

Now you know what you need, take a look to see what’s on offer. Use CreditCard.com.au to check out the range of cards within the category you’re interested in. Look for extras such as features and rewards, but if you want a low fee or low rate card, bear in mind features on these cards are usually basic. Take into account, annual fees, interest and credit limits. Now, it’s time to apply.

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

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