Understanding income requirements for credit cards

Quick insights

• Income is an important factor that is considered during the credit card approval process.
• Consider reviewing the terms and agreements of the card you are applying for to make sure you meet the minimum requirements, such as income and credit score.
• You can include your spouse’s income, investment returns and allowance as part of your annual income on your credit card application.

Income is an important factor when it comes to getting access to lines of credit, such as credit cards. However, it’s not the only factor.

What should I put for annual income on my credit card application?

As part of a credit card application, you may need to provide your annual income. The income you state can include money you receive from the following sources:

• Full-time or part-time employment: You may want to include your hourly wage or salary as well as any bonuses, tips or commissions you earn.
• Self-employment: If you are self-employed, you may include how much money you make.
• Retirement: If you have a retirement account you rely on such as an IRA or 401k, include the amount you withdraw. Income from social security or a pension can also be included.
• Public assistance: This may include certain types of disability income, for example.
• Insurance payments: If you have a policy that provides long-term coverage such as long-term disability, you’ll want to include this as part of your income.
• Income from others: It’s possible to sometimes include the income of a spouse, household member or partner if you have access to these funds, such as in a joint bank account.
• Financial aid: You may be able to include part of your grants, scholarships or some student loans as a form of income.
• Allowance: If you receive an allowance, such as a lumpsum of money each month from a parent or family member, you can include this as part of your income.
• Other income: This can include royalties, investment returns and other types of earnings.

Note that if you are unemployed, you could put down your unemployment benefits as part of your income.

Add up the total amount of income you receive in a year across all forms, from your salary, to investment dividends, and more. This total is the amount you will put onto your credit card application.

How much annual income do you need for a credit card?

There is no hard-and-fast rule as to how much money you need to make in order to get approved for a credit card. Typically, there is variability in income requirements across different types of credit cards, from starter cards to more premium cards with rewards and perks. Generally, more premium cards come with higher income requirements.

When considering how much annual income is necessary to qualify for a credit card, it's important to understand that requirements can vary significantly between different credit card issuers and the types of cards offered. Additionally, other factors like your credit score and credit history can impact your chances of approval. Let’s review some factors that may impact your card choice below.

No fixed minimum for some cards

Some credit cards do not specify a minimum income requirement. These cards often focus more on other factors like your credit score and overall credit history. If you are worried about your income being a factor, a card with no fixed minimum income may be a good option for you.

Requirements vary by card type

Premium credit cards, which offer more rewards and benefits, generally have higher income requirements compared to basic or starter credit cards. That’s why it’s always important to read the terms and agreements of the cards you apply for.

Debt-to-income ratio

Issuers may consider other factors outside of your income when looking at your credit card application, such as your debt-to-income (DTI) ratio, which is closely related to your income. Your DTI ratio is a measure of your monthly debt payments relative to your monthly income. A lower ratio indicates to lenders that you are more likely to manage additional credit effectively. To calculate your DTI, divide your monthly debt installments by your monthly income.

Student credit cards

Some cards, like student credit cards, take into account that you may have a lower income as a student. These cards typically come with lower income requirements and can help you begin to take steps towards building credit. Note: Chase does not offer these cards.

What annual income is recommended to manage my credit card without being worried?

There is no set income that you should be making to manage your credit card. Your annual income is important, but it is more about how you spend your money that becomes a major factor. Typically, it can be helpful to avoid spending more than you can afford on your credit card. In order to avoid accruing debt, you may want to spend only what you feel comfortable you can pay back on time.

It might be a good practice to look at your current debts and calculate your DTI ratio. You may notice that you have outstanding debts you want to pay off first before spending more. A credit card, remember, is a type of loan, so if you miss your payments, you can accumulate debt.

Additionally, your income is not the only thing that gets considered when applying for a credit card. A healthy credit score may also help improve your chances of getting approved for a credit card and some cards may require a minimum credit score requirement. So, even if you have a large income, you could be denied a credit card due to a low credit score.

Is having a lower credit limit recommended if I don't make a lot of money?

If you have a low income and you’re looking to begin your path towards building credit, it may be a good idea to start with a starter or basic card that usually comes with a lower credit limit and low annual fee. This will help you avoid accumulating excessive debt. Please note that the credit limit is determined by the card issuer, not you.

A lower credit limit can help in building your credit history safely, as it can help you avoid overspending.

In conclusion

While there is no one-size-fits-all answer to how much income is needed to qualify for a credit card, understanding the factors that go into determining your approval can help you choose and apply for the right card for you.