Finding it hard to get a credit card without a corporate job? Here’s what you can do
When you have a salary account or a current account, banks are quick to offer credit cards. In fact, the calls can be unending. But, say, for example, you’re a freelancer or self-employed, it can be quite a hard task getting a credit card approved. Banks are generally reluctant to offer a credit card to this demographic, and if they do, there are strict terms and conditions, higher interest rates, and exorbitant annual fees.
In today’s day and age, however, credit cards have become so ingrained in society that it can be hard to get by without one. They offer a number of benefits such as EMI options, rollover credit, emergency cash, loans against card, and so on. Some of the reasons why people require a credit card include being able to cover immediate expenses in the absence of cash, travel internationally without having to carry traveller’s cheques and cash, as well as rack up air miles and reward points. A credit card can be extremely beneficial and even help the user build a good credit score if it is managed well.
So, how can you get a credit card easily without having a salary account or a current account? Here are a few tips and tricks.
Secured credit card
Banks offer secured credit cards against a fixed deposit. The credit limit is usually up to 90% of the value of the deposit. This card can help you build up a good credit score which will in turn make you eligible for better ones in the near future. Here, it is important to check the fees and charges before applying for a secured card.
The reason one can get an easy approval on such cards is because the bank has a security deposit. In case you are unable to pay back the credit card bill, they will recover the dues from the deposit. This makes it less risky for the bank.
Using third-party portals
There are a few portals online that lets customers key in their details, based on which the website generates a list of credit cards they could potentially be eligible for. The list does not guarantee that you will definitely get the card; it simply indicates which cards you are eligible to apply for. The bank will review your credit card application and make their final decision based on that.
Add-on/supplementary credit cards
Banks offer add-on services that allow an individual to take a credit card for a relative, under their main credit card. This works for relations including spouses, children, siblings, parents, and in-laws of the credit card holder. The bill for the add-on card will be generated with the main card, so the principal cardholder has to clear the dues.
You could ask a friend or family member who holds a credit card to make a referral to the bank in your name. Many banks have credit card referral programmes and the person making the referral will also benefit from cashback, reward points, merchandise, and so on.
It would be a good idea to approach the bank at which you hold your savings account. Ensure you have substantial funds in the account and have maintained a good history. For example, if you have taken a loan from the bank and made timely payments, the bank might consider giving you a credit card. Similarly, if you have also maintained a good average monthly/quarterly balance in the account, the bank might be willing to offer you a card.
This is applicable only to those who have previously owned a credit card or taken a loan. You can build a credit score only when you avail credit. A person who has never taken credit will not have a credit score. If you have maintained a good score of above 750, your chances of getting a card approved are high. You can check your credit score for free using various online portals. A good credit score puts you in a better position to negotiate the type of card you want.
You can use your existing assets to prove your worth to the bank. If the bank is assured that they can recover the money in case you are unable to pay the credit card bill, they will be more likely to approve your credit card application. You can use property, gold, LIC policies, and so on as collateral. This is a long shot, but through some good negotiation, the bank might be on board.
Why apply for a credit card?
Credit cards are an extremely helpful financial instrument, but only if it is used responsibly. Some of the reasons why you should own a credit card are:
● EMI options – Credit cards let you pay for your purchases in easy instalments. Some banks even offer zero processing fees and low interest rates.
● Travel – Credit cards make travelling so much easier. Most cards come with travel insurance, too. Customers do not have to risk carrying cash while on their journey.
● Online – There are quite a few online websites that only accept credit card payments. Certain purchases require a credit card. Of late, websites have started accepting debit cards, too.
● Security deposits – People use credit cards to open a tab at a restaurant or a bar, so that they can be free from paying for every purchase, and instead pay the total bill later. Credit cards can also be used as a security deposit at hospitals to avail treatment immediately. Finances and insurance can be arranged in due time.
● Offers and discounts – Banks offer awesome deals and discounts at retail outlets, restaurants, hotels, and more.
● Rewards and cashback – When you use your credit card, you might be eligible to rack up reward points. These can be later redeemed for merchandise, gift vouchers, discounts and more. Some cards also offer cashback that can be used to pay off credit card dues.
● Air miles – Travel credit cards enable a customer to collect air miles which can be used to get free or discounted flight tickets.
● Building a credit score – A credit card can help you build up your credit score. A good credit score is pivotal in getting loans approved. When you need to apply for a home Loan or car loan, the banks will check your credit score to determine whether you are a credible customer or a big risk.
Before you get a credit card, it would be wise to learn more about it. Ensure you make payments in full and on time. Try to ignore the minimum due and do not spend extravagantly on things you don’t need. A credit card can be a boon or a bane; it all depends on how you use it.