If you're on a Galaxy Fold, consider unfolding your phone or viewing it in full screen to best optimize your experience.
Credit cards are all but a necessity in today's digital world, but finding a credit card for unemployed applicants can sometimes be a challenge. That's because card issuers are required to consider your ability to pay your debt before they issue you a card. This guide can help you determine if you still have qualified income and how to apply for a credit card while unemployed.
In the majority of cases, yes, unemployment funds will count as income for your credit card application. In general, if the IRS counts it as income, so will the credit card issuers. Unemployment payments are taxed as income by the IRS. (Keep in mind that this applies to credit cards; not all loan products count unemployment as income.)
Getting a credit card if you’re unemployed is possible because most credit card companies care about income, not employment status. And many sources of income are acceptable in your credit card application. Basically, the law says that as long as you have a "reasonable expectation of access" to funds, they can be counted as income by the credit card company.
An important factor to note is that what qualifies as income varies depending on your age. If you're under 21, only your personal employment income, scholarships, and grants usually qualify. If you're over 21, the list is much longer and typically includes:
Funds gained from other types of debt, like debt consolidation loans, don't count as income. If you find a credit card for unemployed applicants and are unsure if an income source counts, contact the issuer to verify. Never lie about your income on a credit card application.
While you can find a credit card for unemployed applicants, that doesn't necessarily mean you should apply for it. If you're having trouble paying bills, for instance, adding on yet another bill may not be ideal.
Plus, carrying a balance on a credit card from month to month means credit card interest fees stack up pretty quickly. And if you fall behind, you're hit with late payment fees and credit score damage.
On the other hand, sometimes credit cards can help without adding to the problem. For example, if your non-employment income only comes in once a month, but you need to make purchases in the meantime, a credit card for unemployed consumers could be useful.
The important thing is to make sure you can pay off the balance before the due date every month. If you're unsure whether you'll keep up with credit card payments, a card may not be a good decision. Only you can decide whether or not it's a good idea for you to get a credit card without income.
You can find a credit card for unemployed cardholders, but it's harder to find a credit card with no income requirement. Similar to getting a personal loan with no credit, you may be able to get help from someone else if you can't qualify for a card on your own. Generally, you have two options:
Both of these options have risks, particularly for the cosigner or primary account holder. Make sure you can pay off debt you accrue before asking someone to cosign your credit card or make you an authorized user on their account.
Although you can get a credit card for unemployed individuals, qualifying becomes a lot harder without good credit. If you still have income, but have bad credit, consider secured credit cards. You make a cash deposit to secure your credit line, but otherwise secured cards operate the same as any other credit card. A secured credit card for unemployed and bad credit applicants can help build credit over time as you create a record of on-time payments.
To recap: You can find a credit card for unemployed applicants, but you generally still need an income to qualify. There are many qualifying income sources you can include, such as unemployment or Social Security payments. Getting a cosigner or becoming an authorized user may also be an option to get a credit card for unemployed consumers. Secured credit cards are another good choice for those struggling with bad credit.
Yes, unemployment payments can be counted as income for a credit card application.
Yes, you can get a credit card for unemployed applicants as long as you still have some source of qualified income. This can include unemployment payments, Social Security benefits, household income (spouse/partner income), investment and/or retirement fund disbursals, gifts, scholarships and/or grants, child support and/or alimony, rental property income, disability benefits, workers' compensation, and military allowances.
Whether you should get a credit card while unemployed depends on your motivations and income. If you have no income, it may be best to avoid new credit cards so you don't take on debt.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2022 The Ascent. All rights reserved.