As people embark on their financial journey, they encounter various tools to help them manage their finances. Credit cards are one such tool that, if used properly, can help people meet their short-term financial goals while maintaining a healthy bank balance. As of February 2024, the total number of credit cards issued by banks operating in India has surpassed 100 million.
Even though the number of credit cards is rising, the traditional path to obtaining one requires proof of income. This becomes a significant hurdle for many people, especially students, young adults, freelancers, or people with alternative income sources. If you don’t have proper proof of income, don’t worry. In this article, we’ll discuss alternative methods of getting a credit card.
What Is Proof Of Income, And Why Is It Important?
Proof of income is a document (often signed by a third party) that validates your earning potential. It could be your bank statements (signed by the bank), income tax returns (approved by the Income Tax Department), letter of employment (provided by a company), or salary slips.
Since credit cards provide unsecured loans, proof of income enables the bank (or other credit card issuers) to verify your creditworthiness. It also helps banks meet the regulations and guidelines for responsible lending. With an idea of your income, banks can offer you customized products.
Let’s discuss the three most effective ways to get a credit card without presenting any documents.
Read More: Best Credit Cards In India 2024
Three Ways To Get A Credit Card Without A Valid Income Proof
Secured Credit Card
Like secured loans, secured credit cards allow you to get an active credit line in exchange for an upfront deposit (which acts as collateral). Banks issue secured credit cards instead of relying on your income proof or credit score in exchange for a fixed deposit (FD). If you’re a credit beginner and wish to improve your credit score, responsible use of these credit cards can benefit you. In addition, your deposit sits in an FD, fetching you some returns (depending on the interest rates).
Although pledging an FD is one of the easiest ways to obtain a credit card without other income proofs, there are a few downsides. First, you’ll need some cash to cover the upfront deposit. Second, secured credit cards often provide lower limits than traditional cards because banks offer 75 to 85% of the deposit’s amount as the available credit. If you default, the bank will deduct the amount from the pledged FD.
Last but not least, you can only use the secured credit card if the bank has the collateral in terms of the FD. If you wish to close the FD and withdraw the amount, you must close the credit card (with no dues).
- Secured credit cards are a great way to enter the credit cycle, especially for beginners.
- However, one must be mindful of the initial deposit and repayment schedule.
Add-On Credit Card
If you don’t have enough money to obtain a secured credit card, consider applying for an add-on card. Most banks allow primary credit card holders to apply for an additional card in the name of their parents, spouse, or children. A primary cardholder can apply for multiple add-on cards. However, banks often prefer people with good credit scores to those with poor spending habits for issuing add-on cards. Further, they can also decide the spending limit of the add-on card.
Secondary card holders may get all the benefits and facilities provided on the original credit card depending on the bank. Further, they don’t have to pay a joining fee, which is often the case with traditional cards. However, there are a couple of things that everyone should know.
First, not all banks or other fintech companies offer add-on cards. You should check with your card issuer about this. Second, the total credit limit remains the same for all cardholders. Lastly, the primary cardholder is responsible for making the payments on time.
- So, if your parents, spouse, or children have a credit card (with a decent credit score), you can often get an add-on card without presenting your salary slips or bank account statements.
Sufficient Account Balance And Investments
A substantial account balance and a sound banking history could be another way to win the bank’s trust and get a credit card. Banks have an internal scoring system based on your average account balance, transaction history, and several other criteria. If you score well on the system, banks often provide a pre-approved credit card with a specific limit. Meeting with the customer relationship manager could help if your bank hasn’t.
Along with having sufficient funds in your savings account, presenting investment certificates could help the bank understand your financial situation. A well-managed portfolio of stocks, mutual funds, bonds, or other investment tools could convince the card issuer about your repayment capacity, resulting in the issuance of a credit card.
However, these methods might not suit everyone, especially those starting their careers. However, it is very effective for people who take early retirement or are on a temporary break from their jobs, as they would have gathered a significant corpus.
Are There Any Other Ways To Get Credit Cards?
If you’re self-employed and don’t have a stable income, presenting an alternative proof of income, such as bank account statements or invoice receipts, might help.
If you’re about to get a job, presenting a copy of the offer letter (with a proper breakdown of the compensation) could assure the bank about your earning potential. This might benefit your application.
If your credit score is low, having a co-signer (with an excellent credit score) could help turn the scales in your favor.
These methods might work, but they are not as effective as the ones mentioned above.
Frequently Asked Questions (FAQs)
Do banks issue credit cards without proof of income?
Yes, banks issue credit cards without proof of income. Some of the most effective methods include getting a secured credit card, applying for an add-on card, or presenting evidence of other investments.
Which banks provide credit cards without an income proof?
Most banks operating in India, including HDFC Bank, State Bank of India, Axis Bank, ICICI Bank, and others, provide credit cards without income proof. The exact terms and conditions could differ, though.
