Credit card is an emergency fund. Yes, at least several people in India believe so. Most banks ask you for proof of employment before approving your credit card request. This makes it really hard for unemployed and self-employed people to get a credit card. Fortunately, there are ways to do so.
Banks have strict eligibility criteria before sanctioning the credit card. They check your income before sanctioning the credit card. They check income tax return, salary statements before approving your credit card.
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For a credit card, income is far more important than a job. If you don’t have a job, but there’s money flowing into your bank account, you can get a credit card. Just show this proof of income to your bank along with the credit card request. This income could be from business, child support, alimony or royalty. You could also earn income from dividends, professional fees or freelance work.
If you are studying in college, you can get a credit card. You would need investment, trust fund or some financial assets to qualify for a credit card. If you have an FD with sufficient funds at the bank, you can easily get a credit card. Take a look at student credit cards and the various offers, before opting for a credit card.
A co-signer is nothing but a guarantor for your credit card at the bank. The co-signor is equally responsible for the payments. If there is a credit card default, the co-signers credit score is also affected. Usually, parents or guardians are the co-signers of the credit card. Banks could accept a non-related co-signer as well.
See Also: 5 Reasons To Use Credit Cards
If you don’t have a job, you can still get a secured credit card. This card is secured against a fixed deposit. Banks specify a minimum fixed deposit amount before sanctioning a secured credit card. If you default on credit card payments, the bank would break the deposit and recover the dues.
See Also: How To Choose Credit Card?
What if you don’t have a job and there’s no income from other sources like FDs? Well, you can take a supplementary credit card if a family member has a primary credit card. So, homemakers and students can easily get add-on credit cards.
An add-on credit card is an additional credit card issued along with a primary credit card. Banks issue add-on credit cards to the spouse of the primary cardholder, his parents, children, and siblings. The primary cardholder shares the credit limit with the add-on cardholders. You would get a single consolidated statement for all the transactions made using both credit cards.
The primary cardholder earns reward points even for expenses incurred on the add-on cards. You (primary holder) would have to pay off expenses made by other users with add-on cards.
You (primary cardholder) must keep a close watch on all transactions made with the add-on cards. This is to ensure that the credit utilization ratio (This is the ratio of outstanding credit card balances to credit card limits). The credit utilization ratio must not breach the 30-40% mark of total revolving credit available. If you keep breaching this mark regularly, your credit score gets affected.
Most credit card companies issue 4-5 add-on credit cards for free. You can add more credit cards to the primary credit card just by paying annual fees. The primary cardholder can set sub-limits on add-on cards from the primary credit limit.
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