Credit Cards for Low Income: Pros, Cons, Features

Credit Card Pros & Cons for Low Income

For low-income individuals, one of the most essential thing is to build credit. And getting access to credit cards is one of the best solution and can help them do that in a more affordable and less risky way.

However before applying for credit cards, individuals should be aware of various advantages, disadvantages and features. And this article provides information on these important points.


The pros of using credit cards for low-income individuals are:

  • Building credit: Using a credit card responsibly can help build a good credit history, which can make it easier to qualify for loans such as personal loan, car loan and other types of credit in the future.
  • Convenience: Credit cards can be a convenient way to make purchases both online and offline. Especially for online transactions where payment on delivery is not accepted.
  • Rewards and benefits: Some credit cards offer rewards, such as cash back or travel points, for using the card to make purchases. This is a good alternative to save money on essential things; provided the card is used responsibly. However, these cards may not have rewards or benefits compared to the ones offered to high income earners.


The cons of using credit cards for low-income individuals include:

  • High interest rates: Credit cards often have high interest rates, which can make it difficult to pay off balances. This can be especially problematic for low-income individuals who may not have the financial resources to pay off the balances in full each month.
  • Fees: Some credit cards have annual fees, balance transfer fees, and other types of fees that can add up over time.
  • Temptation to overspend: Credit cards can make it easy to overspend, which can lead to a cycle of debt.

Therefore it is important to consider these advantages and disadvantages when deciding on whether or not to apply for a credit card, especially for low-income individuals who may be more vulnerable to the cons.


Low-income credit cards, also known as secured credit cards, are designed for individuals with limited credit history or low incomes. These cards typically require a security deposit, which acts as collateral in case the cardholder is unable to make payments.

Some of the features of low-income credit cards include:

  • Low credit limits: The credit limit on a low-income credit card is usually lower than that of a traditional credit card, which can help prevent overspending.
  • Low or no annual fee: Many credit cards for poor income earners have no annual fee, or a very low annual fee, which can make them more affordable for individuals.
  • Low or no interest rate: Some low-income credit cards have no interest rate, while others have very low interest rates.
  • Security deposit: Individuals can also apply for secured cards requiring a security deposit, which is typically equal to the credit limit. The deposit is refundable when the cardholder closes the account in good standing.

Responsibly using a credit card and paying off the balance on time each month can help build a good credit history and improve credit score. This can be particularly beneficial for low-income individuals who may have a limited credit history or may have had financial struggles in the past.

They should also take into consideration their financial situation and whether they will be able to use the card responsibly and make payments on time. They should also compare different credit card options and choose one that best fits their needs. And also look for secured credit card options which might be more suitable for them.


Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].

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