Earning a low income does not prohibit you from getting a credit card, but you should know what to look for when making a choice.
When applying for a new credit card, how much you earn plays a crucial role, given that most credit cards come with strict minimum income requirements. Your income not only helps credit card providers arrive at suitable credit limits; it also indicates to them whether you’re capable of making timely repayments.
If you don’t earn much, thinking about getting a premium or high-end card is being a little unrealistic, but this does not mean that you have no other options. Plus, in the scenario that you don’t qualify for a credit card, you can always consider getting a debit card or a prepaid card.
What is a low income credit card?
A low income credit card, as the name implies, is one that comes with a low minimum income requirement, and such a card is essentially a conventional credit card in every other aspect. There’s a good chance that a low income card comes with a low purchase rate, but this is not always the case. If the low income card you choose comes with a Visa or a MasterCard affiliation you can look forward to using it globally. You can also use such a card to make online and over-the-phone transactions. Another common feature you can look for in such cards is interest free days on purchases.Rates last updated September 4th, 2015
ANZ First credit card
ANZ First is a credit card with a low annual fee of $30 p.a. For credit card customers who’ve already racked up a credit card debt want to transfer their balances to a lower interest rate to create some breathing room and to save some money, the ANZ First has a balance transfer rate of 0% p.a.
It has a purchase rate of 19.74% p.a. and a minimum annual income requirement of $15,000.
Here are credit cards with low minimum income requirements.
The ANZ Low Rate credit card
The ANZ Low Rate is one an example of a card accessible to low income earners. It has a low purchase rate of 13.49% p.a. combined with an annual fee of just $58 p.a.
The ANZ Low Rate has a minimum annual income of $15,000. This equates to a weekly income of only $300.
It’s also a good option if you want to transfer balances over from your existing credit card. The ANZ Low Rate has a balance transfer rate of 0% p.a. for 16 months, this feature offers relief for cardholders who are incurring high interest charges on an existing credit card.
Commonwealth Bank Low Rate credit card
The CBA Low Rate also has an annual fee of $59 p.a., so the savings made using the low purchase rate aren’t swallowed up by expensive fees. If you have an existing balance from another credit card the CBA will also give you an introductory transfer rate of 5.99% p.a. for 5 months. The transfer rate promotion isn’t as long as low as the ANZ Low Rate, but it’ll still go some way to helping you get your financial freedom back.
St. George Vertigo Visa
St. George’s Vertigo is another worthy addition to the low rate credit card stable. It boasts a low purchase rate of 13.24% p.a. with a balance transfer rate of 0% p.a. for 18 months. The Vertigo could be a great card to carry out your daily spending on and pay off any stubborn credit card debts.
It also has a low annual fee of $55 p.a. and no listed minimum income.
Suncorp Clear Options Standard credit card
Suncorp Bank Clear Options Standard is an enticing low rate, low annual fee credit card worth considering. It is hard to beat this low purchase rate of 12.74% p.a. This card is good for customers who struggle to pay their balance in full every month, as the interest rate on purchases is one of the lowest around and represents great value.
It also has a low annual fee of $55 p.a. and a minimum income of $25,000.
Virgin No Annual Fee credit card
Virgin No Annual Fee offers a cracking free annual fee. For consumers who are carrying an existing credit card debt, the balance can be transferred to this card for a low balance transfer rate of 0.9% p.a. for 15 months. Doing so could be a saviour for customers looking to payoff debt with a low interest rate.
It also has a minimum income of $25,000 and a purchase rate of 18.99% p.a.
How can I compare low income credit cards?
Not all low income credit cards are the same, and when you’re comparing a few, pay attention to the following aspects:
- Income requirement. Certain low income credit cards require you to earn no more than $15,000 p.a. There are others that increase this limit to $20,000 p.a. or $25,000 p.a. Which one you can apply for, then, depends on just how much you earn.
- Annual fee. You can come by low income cards that don’t charge any ongoing annual fees. There are certain cards that don’t charge annual fees only for the first year, and there are some that charge ongoing annual fees from the very first year. With cards that charge annual fees, this fee can vary noticeably.
- Interest rate. Find out how much you’ll have to pay as interest, not just for purchases, but for cash advances as well. Interest rates on purchases can vary significantly between low income cards, and this can make a big difference if you don’t pay your account’s closing balance in full every month.
- Interest-free days. Most credit cards give cardholders the ability to make use of interest-free days on purchases, but not all do, so find out if the card you choose does. The maximum number of interest-free days available varies from one card to another, so this aspect requires your attention as well.
- Extras. If you’re considering transferring balances from an existing card or more, you can do well by looking for a card that comes with a balance transfer offer. If you plan to use your card regularly or if you’re a frequent traveller, you can consider applying for a low income card that rewards spending.
Tips for low income earners applying for a credit card
Applying for a new credit card is not complicated, but knowing of what to expect ahead of time is always a good idea. Go through the following to increase the chances of your application’s approval:
- Don’t fret. Many credit card applicants worry too much about going through the paperwork involved in submitting an application. Know that you have to meet minimum income requirements, which can be as low as $15,000 p.a. to qualify, and this works out to around $290 per week.
- Apply as a joint applicant. If your individual income does not qualify you for a credit card, you can consider getting a joint credit card, where you and your spouse are joint cardholders. When applying for a joint credit card you can submit combined household income, so you can meet minimum income requirements easier. Check this page for a list of institutions that offer joint account credit cards.
- Take stock of your existing debts. Credit card providers will not give you a credit card without taking a look at your debt to income ratio first. If a major portion of your income goes towards clearing existing debts, the likelihood of an approved credit card application remain slim, so it’s best that you work on paying off some of your existing debts before applying for a new credit card.
- Add to your income. Consider working extra shifts or taking on a second part-time job as this can add to the income you need to show, and don’t forget to include income from all sources in your application.
- Review your credit file. While income is an important aspect, so is your creditworthiness. Go through your credit file to find out if you suffer from poor credit, and if so, take measures to repair the same. Apply for a new credit card only after you see positive changes in your credit file, because declined applications will only further tarnish your credit history.
- Apply for one card at a time. Every time you apply for a credit card the same finds a mention in your credit file, and credit card providers don’t look at simultaneous applications for credit with favour.
- Don’t lie. If you’re considering fibbing on your credit card application, don’t. This constitutes as fraud.
Terry is working as a part time retail assistant while he studies to become a mechanic. He earns an annual income of $17,000. This translates to a weekly income of roughly $325 before tax. He’s applying for a credit card to be able to make emergency bill payments or purchases. His wife Demelza earns an annual income of $35,000.
If Terry applies for a credit card and includes both his own income and that of his wife, he may be able to qualify for a platinum or gold credit card, which may even come with a rewards program. Their combined income in this case would be $52,000.
Terry might still want to apply for a low rate credit card with only his income if his wife already has a credit card of her own. If he does this he’ll have a credit card with a low credit limit for emergency purchases and payments.
Credit card alternatives for low income earners
Not qualifying for a credit card doesn’t have to be the end of the world, and you can still find alternatives with similar features, barring the credit. Here’s what you can look forward to if you can’t get a credit card:
- Debit card. Debit cards come linked to bank accounts, and give you access to money in your account. These also offer features that are in line with prepaid cards, and you can look forward to using such a card just about anywhere, at practically any time.
- Prepaid credit card. A prepaid credit card doesn’t allow you to spend more than you’ve loaded onto the card at any one time. It’s also a good way to get the security benefits and flexibility of a credit card while travelling overseas or shopping online. Simply transfer funds from your savings account either online, through BPAY or over the phone.
Glenda is travelling overseas next year after she graduates from university. She’s already paid for her trip with the help of a gift from her parents, and now wants to sort out how she’ll keep her spending money safe while travelling. Her credit card application was recently rejected because she only makes approximately $12,500 a year.
Glenda decides to use an OzForex Travel Card. She can load up to nine different currencies onto the card, and can lock-in exchange rates for each of them. The card also has a security chip and PIN so her money is safe from credit card scammers.
If you earn $15,000 p.a. or more and don’t have poor creditworthiness you can definitely think about getting a low income credit card. Bear in mind that minimum income requirements can vary from one card to the next, as can features like annual fees and interest rates. As a result, make sure you take some time to compare your options well, and apply only after you know which card would work best for you.
Frequently asked questions
I don’t qualify for a credit card but my partner has one. Do I have to meet any criteria to get an additional card linked to his card?
First, your partner has to find out if their credit card provider provides additional cards. If it does, they can request for an additional card for just about anyone aged over 18 years, as long as they are ready to accept liability for all purchases made using such a card.
How often can I apply for a credit card without worrying about it showing on my credit file?
Most credit card providers find a credit inquiry once every three or six months acceptable.
Can I qualify for a loan if I don’t qualify for a credit card?
Eligibility criteria for loans and credit cards aren’t exactly the same, and you might qualify for a payday loan or a secured personal loan even if you don’t qualify for a credit card.