Last updated: 22/10/2020 | Estimated Reading Time: 4 minutes
Credit cards for the unemployed
Due to market pressure, credit cards for those who are unemployed or have poor credit ratings are becoming more and more readily available.
While you will, as a general rule, pay more for your credit card if you’re unemployed; by reading our guide and comparing cards with online you’ll be able to make sure that you’re getting the best deal possible.
In This Guide:
- Irregular employment, low income and credit cards
- Credit limits
- Alternative credit options
- Compare credit cards for the unemployed
Irregular employment, low income and credit cards
For those who lack steady employment, obtaining a credit card will be somewhat more difficult than for others. However, whether you’re unemployed, self-employed or on a zero-hour contract, there are plenty of credit options available for those without regular employment.
The same applies for those with a poor credit rating. In both cases you’ll have to shop around but you will be able to find a credit card that is appropriate for your situation.
A credit building card is a type of credit card specifically designed for people in this situation. Credit building cards will typically come with a low limit that is comfortably within your means. The idea is that you can borrow and pay off your credit with ease, thereby steadily improving your credit score by demonstrating your ability to pay off debts.
Most credit cards of this kind require a minimum annual earning threshold, usually of around £10,000, but some only asking for £4,000. This is simply because without any proof of any kind of income, there is no way for the credit card companies to be sure that you will actually be able to pay back the credit you owe.
As well as a minimum earning threshold, there will be various other conditions that you must meet in order to be able to take out a credit card if you’re unemployed. Things that will be taken into account include how many times (and how recently) you’ve applied for similar cards in the past, and whether or not you’ve got a history of bankruptcy or any other county court judgements (CCJs).
The credit limit on a card is, rather simply, the maximum amount of credit you can have at any one time. If you’re unemployed, then the credit card company will impose a lower credit limit than they would for someone with a steady and/or larger income.
This simply reflects the risk that the card provider is taking by offering you credit. Since a credit card essentially amounts to a short term loan, the providers will want to be as sure as possible that you’ll be able to pay back what is borrowed.
When you take out a credit card, you’ll be charged interest on any credit you use. This is factored into an annual percentage rate, or APR. The APR then is essentially the cost of the card.
Credit cards for the unemployed or for those with bad credit will typically come with a higher APR than those designed for people with steady employment and/or higher income.
Again, this reflects the added risk on the part of the credit card company when it comes to lending out credit.
Alternative credit options
If your credit rating isn’t too bad, but you are still struggling with irregular income and existing debt, then you might want to consider a balance transfer card.
A balance transfer credit card is designed to help those with a good credit rating but without a steady income and allows you to transfer debt from one card to another to help you temporarily avoid paying interest.
Compare credit cards for the unemployed
If you’re unemployed or have an irregular income for any reason, then you should shop around online to see what kind of credit cards you could take out.
Use our credit card comparison service to see what options you have available. It’s free and easy to use so you can start using credit right away and make sure that you can keep up with day to day expenses while you’re in between jobs or pay cheques.