Layoffs, health issues, relocation, and a number of other factors can leave people without a job, and that can make it extremely difficult to make ends meet.
While you should stick to strict budget during your period of unemployment, you may still need access to credit to get you through hard times. The catch-22 is that it can be difficult to qualify for a credit card without steady income.
Luckily, credit card issuers look at other sources of earnings besides employment, so you can often qualify if you get a public assistance check or receive money from a spouse or relative.
6 tips for getting a credit card without a job
Ultimately, you’ll want to secure enough income from employment or side gigs to achieve financial stability. But while you’re struggling with unemployment, a credit card can help you avoid more costly methods of borrowing, such as payday loans or pawn shops. Here’s how to get one, whether you have income or not.
1. Count all of your income
Eligible income sources vary by credit card issuer, but they often include things like:
- Earned wages from part-time, full-time, or seasonal employment
- Self-employment income
- Interest or dividends
- Retirement income
- Public assistance
- Money that someone else regularly deposits into an account for you to use
The income threshold you must meet may not be as high as you think, especially if you have a good credit score and don’t have debt.
To ensure the greatest likelihood of success, include all acceptable sources of income when calculating your total. Read the terms and conditions for the card you’re applying for to see what qualifies.
2. Include your spouse’s income
The Ability to Pay provisions of the 2009 CARD Act stipulate that credit card issuers must verify your ability to meet monthly payments prior to approval for a card.
However, credit card issuers can include “any income and assets to which the consumer has a reasonable expectation of access.” This means, for example, if you share a joint account with your spouse or your spouse regularly deposits money into an individual account for you, you can count that amount as income for the purposes of most credit card applications.
3. Go with a cosigner
If the above income streams aren’t enough to qualify you, consider asking a family member or trusted friend with healthy credit to cosign a credit card application for you.
By cosigning, your friend or family member is agreeing to be responsible for your debt in the event that you can’t pay it. This can help your chances of getting approved if you have a low income. But make sure that you’ll be able to meet the monthly payments or your cosigner will take on your debt as well, which could tank their credit score — and potentially harm your relationship with them.
You also want to see to it that you choose a cosigner who has good or excellent credit to decrease the risk of rejection. Additionally, pick someone who will continue to be responsible about making their payments on time.
Note that not all credit card issuers allow cosigners on applications. You’ll need to verify that it’s permitted or submit an application for a different card that does allow cosigners.
4. Become an authorized user
Another way to get access to credit without any income is to become an authorized user on someone else’s credit card. It’s usually free to add an authorized user on a credit card without an annual fee, and the primary cardholder can often set a spending limit for you if they’re worried about you running up their credit card bill.
As an authorized user, you’ll get a credit card that you can use to make purchases, but you won’t be responsible for the payments. This option is especially helpful for people who have poor credit or no credit history, since the status of the cardholder’s account affects your credit score. If the cardholder authorizes you to use an account in good standing, it can help you build credit.
5. Consider a secured credit card
With a secured credit card, you put down a refundable deposit upfront, and that amount becomes your credit limit. This reduces the risk to the credit card issuer, which is why you’ll have a better chance of getting approved. The catch is that many secured credit cards have high annual percentage rates — or APRs — with few perks, and some have annual fees.
One option for a secured credit card with a $0 annual fee and a rewards program is the Discover it Secured card. You can earn 2% cash back on purchases at restaurants and gas stations (up to $1,000 quarterly), and 1% cash back on all other purchases. Plus, Discover will match your earnings for the first year.
You can decide the deposit amount up to the approved credit line. Discover will also automatically reevaluate you for a traditional credit card after eight months.
Another option is the Capital One Secured Mastercard, which allows you to get started with a small deposit of $49, $99, or $200, depending on your credit score. You’ll get a credit limit of at least $200, and that will increase after your first five on-time payments.
6. Try credit card alternatives
If you have a checking account, your bank will likely give you a debit card to use. If you don’t have one, you can purchase Visa gift cards or try an alternative card like the American Express Bluebird, which bills itself as an alternative to banking.
It allows you to access ATMs and provides you with Purchase and Fraud Protection. There are fees for certain transactions, but you can also use the card completely free if you know the rules.
The downside of these options is that you’ll only have access to the money that’s currently in your account. If you’re struggling and looking for a way to cover your expenses while you look for a job, these alternatives won’t help you.
The bottom line
Whether you’re looking to access credit or just protect your money while you’re unemployed, you have options. But remember that a credit card doesn’t provide free money, so you’ll need a plan to pay back what you owe. Add up your income sources and set a stringent budget, then try to pick up a side hustle while you look for a new full-time job.
No matter what led to your job loss, you probably won’t be unemployed forever. Keep your head up, work on your resume, and limit your spending as much as possible. Once you’re back in good financial shape, you may be able to apply for a rewards credit card with a higher credit limit, which could open the door to all kinds of opportunities.