Credit Cards are a useful financial product that allows you to buy things, avail of discounts, and even get cashback on your transactions without needing to pay them right away. Due to such advantages, Credit Cards have become highly popular. In fact, according to a recent report, in the financial year 2022, nearly 73 million Credit Cards were issued in India.
However, obtaining a Credit Card necessitates providing documentation like proof of identity, residence, and, most importantly, proof of income. Yes, you heard it right. It requires an income statement! You may wonder if you can get a Credit Card without income proof.
The answer is 'Yes'. You can get a Credit Card without any proof of income. Read this article to know how!
3 ways to get a credit card without income proof
There are viable paths to securing a Credit Card with no income proof. Some of the ways are:
1. Student credit cards
If you are a student, obtaining a Credit Card might be easier than you think. Student Credit Cards are designed specifically for students like you. These cards are usually zero annual free Credit Cards.
Instead of demanding substantial income proof, they often need collateral. This means that even if you work part-time or have a fixed deposit as collateral, you can qualify for a student Credit Card.
These cards can be a great stepping stone to start building your credit history and learning responsible financial habits.
2. Credit card against fixed deposit
You can get a Credit Card with no income proof against a fixed deposit as collateral to secure a Credit Card from a bank or financial institution. A fixed deposit is a savings account where you deposit a lump sum for a specified period to earn interest.
When obtaining a Credit Card through this method, the credit limit extended ranges from 75-85% of the fixed deposit. The fixed deposit serves as security for the Credit Card issuer. Thus, if you fail to make timely payments on the card, the issuer can use the funds from the fixed deposit to cover the outstanding balance.
This approach is particularly advantageous for individuals without a regular income source or strong credit history, as it offers the bank assurance while enabling the individual to access credit.
3. Credit card against primary credit card
Acquiring a supplementary Credit Card, often called an add-on or secondary card, entails using an existing Credit Card arrangement. This implies you can request an extra card linked to the same account if you possess a primary Credit Card. Many banking companies provide zero annual free Credit Cards as add-ons, thus reducing your cost.
The credit limit assigned to the new card typically corresponds to the credit limit of the primary cardholder. The primary cardholder remains accountable for all transactions conducted using the supplementary card, and any unsettled dues influence the credit reputation of the primary cardholder.
This approach is particularly beneficial for individuals who lack proof of income and are part of a household where a family member holds the primary Credit Card. You also need a good Credit Score and history to qualify for an add-on card. Nevertheless, it's crucial to responsibly manage the usage of the supplementary card to prevent any adverse effects on the primary cardholder's credit history.
Must Read: Tips for Increasing Your Credit Card Limit
What are the things to consider while applying for a credit card without income proof?
When applying for a Credit Card without income proof in India, there are important factors to remember to ensure you make the right decision for your financial situation. Some of the considerations are:
1. Choose the right card type
Pick a card that suits your situation, like a student or secured card. Different cards have different benefits for people without traditional income proof.
2. Assess your ability to repay
Check if you can handle the card's bills without income proof. Think about your savings, alternative income, or help from co-signers to ensure you can manage payments.
3. Understand interest rates & fees
Be aware of extra charges and how much you will pay in interest. Some cards have annual fees and late payment charges. Look for clear terms and fair interest rates.
4. Opt for a reliable financial provider
Opt for an established Credit Card issuer when seeking a Credit Card without income verification. Prioritise those with positive online feedback, focusing on user experiences and customer support quality through reviews and testimonials.
Must Read: What Is A Credit Card Billing Cycle?
What are the factors that impact your creditworthiness for a credit card?
When it comes to your creditworthiness, several factors play a role in determining how lenders see you. Some of the factors are:
1. Payment history
Your record of paying bills and debts on time is vital. Consistently paying your bills by the due date shows lenders that you're responsible and can be trusted to repay what you borrow.
2. Credit utilisation
This is the ratio of your Credit Card balance to your credit limit. Keeping your balances lower than your limit is better for your Credit Score. It shows you're not relying too heavily on borrowed money.
3. Length of credit history
The duration you have held credit accounts plays a pivotal role in how reliable you appear to lenders. A longer credit history showcases your ability to manage credit responsibly over an extended period. Thus, maintaining older accounts and ensuring their activity can work in your favour.
Conclusion
You can find various options while looking for a Credit Card without income proof in India. Thus, considering these options, it is important to weigh the benefits and responsibilities carefully. Regardless of the chosen route, responsible financial management remains a crucial factor.
Furthermore, understanding the terms, assessing your ability to repay, and building a positive credit history are universal principles that will serve you well. While the road might appear challenging, remember that your financial journey is uniquely yours.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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