People with low income can get credit cards, and even they get to choose from various options.
A number of credit card providers offer low income credit cards, aimed primarily at low income earners, and you can apply for such a card if you’re on retirement income, if you receive government benefits, and if you’re unemployed at the time of application. Bear in mind, though, that you would have to meet certain lending criteria to get a card. Most credit card providers list the minimum income requirements in the application, but typically you can look forward to applying for a low income credit card if you earn at least $15,000 p.a. As there are many low rate cards available in the market, it’s important to compare your options to find the right one for you.
Minimum Income Credit Cards ComparisonRates last updated October 14th, 2015
What is a low income credit card?
A low income credit card, as the name suggests, is one that has a low minimum income requirement, which usually begin at around the $15,000 p.a. mark. These cards work like conventional credit cards, with most of them carrying either a MasterCard or a Visa affiliation. Such credit cards find global acceptance, so you can use your card just about anywhere in the world.
You can use such credit cards to pay for in-store purchases, and you can also use them for online and over-the-phone transactions. Depending on the card you choose, you could even use your card for cash advances and balance transfers.
How can I compare low income credit cards?
As there are many low income cards available, it is important you learn how to distinguish one from the next, and here are aspects you should compare:
- Interest rate. Pay attention to the interest you have to pay on purchases because even a slight difference in percentage can lead to a significant difference in how much you end up paying in the long run, especially if you keep balances rolling in your account from one billing cycle to the next. If you plan to use your card for cash advances, pay attention to the cash advance rate, which is normally considerably higher than the purchase rate.
- Annual fees. While some low income credit cards don’t charge any annual fees, some others do, so this aspect requires your attention.
- Bonus features. Bonus features can come in the form of introductory interest rate offers on balance transfers and purchases, rewards, as well as complimentary insurance covers. These can vary from one card to the next.
What do I need to remember when applying for a low income credit card?
Getting a low income credit card might not be difficult, but it’s important that you consider the following before applying:
- Income details. If you don’t meet the minimum income requirement, remember that lying about your income on a credit application is illegal. That said, it’s important that you list all sources of income, because the higher your income, the better your chances for approval.
- Joint applications. If you feel you don’t earn enough, consider applying as a joint applicant with your spouse.
- Too much debt. Your application for a new credit card depends on your ratio of assets to debts. If you’ve not had success with recent credit card applications even though you meet minimum income requirements, it’s important that you eliminate some of your existing debts before applying again.
- Not enough money. Another way to add to your income is to actually earn it, and you can do this by getting a part-time job or a temporary second job. Listing this additional income in your application can increase the likelihood of approval.
- Renting. If you live on rent, don’t mention rent for the entire household, mention only your share.
What are the pros and cons of a low income credit card?
- Easy access to funds. A low income credit card can give you easy access to extra money as and when you need it. You can access funds to pay for purchases and to pay bills, and you can even use your credit card to get cash.
- Interest free days. Credit cards give you the ability to make purchases and not pay any interest for a given number of days. These interest-free days on purchases can vary from card to card, and to make use of these interest-free days you have to pay your account’s closing balance in full every month.
- Interest rate offers. You can find low income cards that come with promotional interest rate offers on balance transfers and purchases. Such offers require that you pay little to no interest on specific transactions for a limited time.
- Interest. If you don’t pay your account’s outstanding balance completely each month, the outstanding balance continues attracting interest until paid in full. By making minimum monthly payments you would end up paying a lot in the form of interest, so you’ll want to pay your balances off as soon as possible.
- Unmanageable credit. If you end up using your card without establishing how you’re going to make repayments, you might not be able to make timely repayments, only to build debt to an unmanageable level. The impact this would have on your creditworthiness would be none too pleasing.
A low income credit card can be a good thing provided you use it in the right manner. Such a card can give you access to funds no matter where your travels take you, and you can also look forward to making purchases without having to pay any interest. Don’t forget that aspects like annual fees and interest rates can vary noticeably from one credit card to the next, so compare as many as possible before you apply.Back to top
Frequently asked questions
What eligibility criteria would I have to meet to apply for a low income credit card?
You should be over 18 years of age, you should be an Australian citizen or a permanent Australian resident, and you should not have poor creditworthiness.
I don’t earn enough but my spouse has a credit card. Can I get an additional card linked to his card?
If the card provider provides additional cards, you can think about getting one, because additional cards have no minimum income requirements. The primary cardholder, though, remains liable for all purchases made using an additional card.
If a card I choose comes with a balance transfer offer, would I have to pay balance transfer fees?
You might have to pay one to two percent of the transferred amount as balance transfer fees, but this is not necessary, and depends on the card you get.