3 Questions About Applying for Credit Cards When You’re Unemployed
Credit cards are the most common way to pay for goods in today’s world, and let’s be honest: they make buying stuff so much easier, both in-person and online.
But, applying for a credit card can be a daunting task, especially if you don’t have a job or a steady source of income. After all, most credit card companies decide whether or not to approve you for a card based on your income, credit score, and a few other factors.
Don’t lose faith! It’s possible to get a credit card even if you’re unemployed.
1. Can I Apply for a Credit Card if I’m unemployed?
The short answer is yes. You can still apply for a credit card if you are unemployed, especially if you or your partner have some form of income.
As you would expect, credit card companies want to make sure that you can pay back any amount you borrow.
Credit card companies look at a combination of income, credit history, credit score, and existing debts to determine whether or not someone will be approved for a credit card. They also consider the debt-to-income ratio, which is how much debt someone has to pay every month relative to how much income they earn.
There are several other forms of income, beyond traditional wages from a job, that you can use to bolster your credit card application:
- Household income. If you are 21 or older, you can include any household income that you might have access to. For example, if your spouse has a job, you can include that income in your credit card application.
- Investment returns. If you have an investment portfolio that provides regular income, you can include that in your credit card application.
- Unemployment benefits. If you’re unemployed and receiving unemployment insurance benefit payments, you can include that money in your credit card application.
- Social security benefits or pensions.
2. Can I get Approved for a Credit Card if I Don’t Have Any Income?
It will be harder to get approved for a credit card if you don’t have any income. That’s obvious.
But, if none of the alternative sources of income listed in the section above apply to you, there are a few other options.
- Become an authorized user on someone else’s card. You will get your own card, but the person with the primary account is responsible for payments. This requires significant trust between both parties because it will tie your credit histories to each other. But, this can be an excellent way to build credit if you have a family member or partner who is willing.
- Find a co-signer. Some credit card companies allow a co-signer on a credit card application. This is also a significant responsibility, especially for the co-signer, as they are legally responsible for making payments if you cannot.
- Get a secured card. Secured cards require security deposits upfront, usually equal to the credit limit. These cards allow you to build credit over time, and your deposit will be returned to you when you close your account or upgrade it to a standard credit card. This is a good option if you can save money for the deposit or do not have close friends or family members with solid credit scores.
- Get a student credit card (students only!). If you are a student, you may be able to get a student credit card. Once again, you do need to be able to show some source of income. However, if you have anyone over the age of 21 who can co-sign for you, you may be able to be approved. In some cases, scholarship or grant money left over after you pay tuition may count as income as well.
3. What are Some of the Credit Cards to Consider if you’re Unemployed or Don’t Have an Income?
As I mentioned above, you may want to consider two types of cards if you are unemployed or don’t have consistent income: secured cards and student cards.
Secured cards require a security deposit, usually equal to the credit limit. Most major credit card companies offer a secured card, which, if used responsibly, can eventually be upgraded to a standard credit card.
Here are a few:
Capital One® Secured Mastercard®: This card has a minimum deposit of $49, a $200 credit line with minimum deposit, no annual fee, and a 26.99% variable APR.
Discover it® Secured: This card has an equal deposit and credit line (i.e., a $200 deposit means a $200 credit line), no annual fee, a 2% cash back, and cash back match for the first year, and a 22.99% variable APR.
OpenSky® Secured Visa® Credit Card: This card has an equal deposit and credit line, a $35 annual fee, and 0% APR for the first three months, then 17.39% variable APR.
Student cards are meant for students only. They usually come with lower credit limits than standard consumer cards, have higher APRs, and sometimes have rewards specifically tailored to students.
If you do not have an income, you can get a student card with the assistance of a co-signer.
Here are some examples of student cards:
Discover it® Student Chrome: Believe it or not, this card has a reward for good grades. You can also earn 2% cash back at gas stations and restaurants, cash back match for the first year. This all comes with no annual fee, and 0% APR for the first 6 months. After the first 6 months, your APR will range anywhere between 12.99% and 21.99% APR.
Discover it® Student Cash Back: This card also has a reward for good grades. You can also earn 5% cash back on everyday purchases from some vendors, 1% cash back on other purchases), and cash back match for the first year. This all comes with no annual fee, and 0% APR for the first 6 months. After that, your APR will range anywhere between 12.99% and 21.99% APR).
Journey® Student Rewards from Capital One®: This card has 1% cash back on all purchases, no annual fee, and 26.99% variable APR.
So, let’s review one more time…
As long as you or a co-signer can prove you can pay off a credit card bill, you can still get approved for a credit card. Even if you are unemployed or do not have a reliable income.