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How to Apply for a Credit Card when You're Unemployed or Retired

(CBS NEWS)When you're unemployed, applying for a new credit card is probably one of the last things on your mind. But even when you don't have a job, you might still need a card for the security, convenience, rewards and benefits it offers. If you're eyeing a new piece of plastic, read on to learn how to apply for a credit card, despite your situation.

Reporting income

Not having a job doesn't preclude you from being able to repay a loan. In fact, when asked to provide your income, you are permitted to include many sources besides a day job. Retirees can include income from Social Security or investments, while others can list disability payments. Alimony and child support payments may also be mentioned.

Married applicants can list any household income they have access to, even if they're unemployed. Originally, the Credit CARD Act of 2009 prevented using household income on a credit card application, in order to prevent adult children from applying for a line of credit using their parent's income. However, this rule had the effect of denying credit to non-working spouses, so it was later amended to permit applicants to use their spouse's income, so long as they have access to it.

Other ways to apply

If you don't have a lot of income or it's not high enough, you still have some options. One is applying for a secured credit card, which works much like standard credit cards but requires a refundable security deposit in order to start the account. Nearly all secured card applicants are approved so long as they can verify their identity and have no pending bankruptcies. (You can read about the best secured credit cards in America here.)

Once a secured card account is open, cardholders receive monthly statements and are expected to at least make the minimum payment before it comes due. When they carry a balance, secured credit card users incur interest charges at the rate noted by their issuer. Secured cards typically offer the same security and convenience of standard credit cards; many also feature travel insurance and purchase protection benefits.

Another option is having someone co-sign your application. When you do that, both applicants become individually responsible for repayment of charges. If one doesn't pay, the other becomes responsible.

Finally, some credit card users simply become authorized users on another person's account. Just remember, the primary cardholder is always responsible for repayment.

Credit cards are an essential tool for many Americans, even those who are unemployed. By using all possible sources of income or taking a different route altogether, you'll increase your chances of getting that new piece of plastic.

If you're considering adding a new credit card to your wallet, be sure you know where your credit stands first, as this will determine the types of rates you may qualify for. You can view two of your credit scores, updated monthly, for free on Credit.com.

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