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Getting Approved for a Credit Card While Unemployed—Why You Don't Want to Miss Out!

Updated: May 6

Have you ever missed out on an opportunity because you lacked information? For example, cruise control is a nice feature to use when driving a long distance in your automobile—if you know the feature exists or you know how to use it. Oftentimes, we just need someone to tell us—or show us—how to avail ourselves of this option while driving.

The Credit Card Accountability Responsibility and Disclosure Act (CARD Act) that became federal law in 2009—and subsequently amended in 2013—fits a similar scenario. It was created to include "features" to protect consumers from deceptive and abusive practices by credit card issuers. One "feature" involves considering third-party income from applicants.

The CARD Act  creates an opportunity to earn more credit card rewards!
Families earning more credit card rewards is worth smiling about! Image courtesy of Wix

All opinions and reviews expressed herein are the author's alone and have not been reviewed or approved by any credit card issuer, airline, bank, hotel chain, or other entity. Some of the credit card offers and links appearing in this article are from companies from which we may receive commission or a referral bonus when you click on the link. You do not need to use our links but we appreciate it when you do—it helps support our website!

The Credit Card Accountability Responsibility and Disclosure Act

Before the CARD Act was passed in 2009, many credit card issuers were perceived as engaging in deceptive and abusive practices against consumers. This included raising consumers' interest rates for any reason and without notice, imposing unlimited fees—including late fees and over-the-limit fees—even though credit card issuers approved transactions over consumers' credit limits, and targeting college students and young adults who could not repay their debt.

The CARD Act includes many provisions designed to protect consumers from deceptive and abusive practices by credit card issuers. One example is the prohibition of a practice called double-cycle billing. Before the CARD Act, interest would be calculated based on the average daily balance of your previous two billing cycles; this sometimes translated into paying interest on charges that were already paid off! Under the CARD Act, credit card issuers must calculate interest based on the daily balance on an account's average during the previous billing cycle.

Another provisional change had to do with credit card issuers raising interest rates without notice or for any reason. Under the CARD Act, credit card issuers are now required to communicate interest rate increases before they take place; consumers also have the option to opt out from these changes. The practice of universal default was also banned; a credit card issuer no longer can increase the consumers' interest rate when an unrelated creditor reports a late payment.

Additional protections address unfair fees—such as an over-the-limit fee or high account opening fees. Specific disclosure language is now required; this involves indicating the length of time to pay off an existing balance if only the minimum payment is made each month. Also, consumers now have at least 21 days to make their payment after their statement close date.

All of the regulations within the CARD Act help protect an asset that is very important—a good credit score! Learn more about this topic in the following post: Do You Want a Good Credit Score? Additionally, feel free to use our Credit Card Calculator to determine how long it will take to pay off your balance based upon your monthly payment amount or the monthly amount required to pay your balance off within the selected number of months.

Why Would I Get a Credit Card While Unemployed

Getting a credit card while unemployed sounds like a dangerous combination. Racking up charges without the ability to pay them back is a sure way to increase your debt—and add stress to your life. Why would anyone consider putting themselves in this type of situation?

Before we answer this question, it is important to reiterate the importance of being able to pay off your credit card debt in full. Even with the CARD Act, interest rates sometimes are above 20%! In 2020, according to Experian's State of Credit 2020: Consumer Credit During COVID-19, the average balance on a credit card in 2020 was $5,897. How much interest would you accumulate in a year at a 20% APR? $1,179. Yikes.

However, an individual may be unemployed but have access to funds from a third-party, such as a spouse. In this type of scenario, the husband and wife can work together to accumulate credit card rewards—essentially creating an opportunity to benefit from more miles & points earned through credit card use! Learn more about the value of credit card rewards in the following post: Credit Card Miles & Points—The Secret You Didn't Know About!

How Can I Get a Credit Card While Unemployed

Before the CARD Act was amended in 2013, data suggests that some credit-worthy individuals had their credit card applications declined, even though they could manage their debt. This included stay-at-home spouses with access to income from their spouse. After the amendment, credit card issuers are now able to consider third-party income from credit card applicants who are 21 or older if the applicant has a reasonable expectation of access to it.

For example, Chase incorporates this language onto their online application for the credit card products they offer. Specifically, within the "Total gross annual income" field it states:

"Your 'total gross annual income' is what you earn or reasonably expect to earn...You can also include money that someone else deposits regularly into your account (individual or joint). If you're 21 or older and regularly use income from others to pay your bills, you can include that too." (Italics ours.)

This is an awesome asset available to many consumers! I have benefited from this provision. My wife was unemployed and applied for the Chase Sapphire Preferred® Card. Chase declined the application even though she included my income on the application and had a high credit score. She contacted Chase's reconsideration line and explained that she had joint bank accounts with me—that constituted a reasonable access to my income. All she had to do was submit our prior bank statement to Chase. Within a short period they approved her application! Chase was wonderful to deal with and they offer some of the BEST credit card products!

At the time, the welcome bonus for the Chase Sapphire Preferred® Card was 80,000 Ultimate Rewards® points. Now it is 60,000. This is a must-have credit card if you are getting started with Award Travel. You can apply for this card here! Learn more about this amazing card in the following post: Chase Sapphire Preferred—The Best Credit Card Just Got Better!

Strategically Working Together to Increase Your Miles & Points

Credit card miles & points enthusiasts will often throw around the term "two-player mode." Essentially, this is a way for two individuals to work together to increase their credit card rewards which can then be redeemed for award travel, cashback, or other redemptions. For example, my wife and I both benefited from the welcome bonus offered by the Chase Sapphire Preferred® Card. It did not require any extra spending; just using our credit card for our everyday purchases until we met the spend requirements.

"Two-player mode is one of the easiest ways to increase credit card rewards as a family."

Chase assigns a value of 60,000 Ultimate Rewards® points as being worth $750 toward travel when redeemed through Chase's Travel Portal. "Two-player mode" would double this amount to $1,500! However, one of the most valuable ways to redeem your Ultimate Rewards® points is through one of Chase's 14 transfer partners. By utilizing this method, it is possible to get a value of 1.5 cents per point or more! This would translate into a potential "two-player mode" value of $1,800 or more! Do you need any help with transfer partners? Learn more at the following post: Why Should I Consider Using a Credit Card Miles & Points Consultant?

Having an unemployed spouse get approved for a credit card opens the door to future approvals. For example, a few months after being approved the Chase Sapphire Preferred® Card, she received an invitation to apply for the United Quest℠ Card—a co-branded Chase credit card—with a 100,000 mile welcome bonus! This time she was approved without any documentation needed to substantiate her reasonable access to my income. It was evident that she had built a solid, reliable relationship with Chase, and she was less of a lending risk.

The United Quest℠ Card packs a punch, including many benefits that make this a "sock-drawer" credit card. You can apply for this card here! Learn more about this from the following post: United Quest Card—The Best Airline Credit Card!

Should I Apply for a Credit Card?

It depends on the individual. It is very important to use credit cards responsibly. There are essentially two aspects to responsible credit card use:

  1. Pay the outstanding balance in full on or before the due date; and

  2. Don't use your credit card to buy an item you normally wouldn't purchase with cash on hand.

If you can adhere to those two points, you will avoid paying interest and maintain healthy spending habits. the opposite of this method—paying out interest and spending money impulsively—will eat away at the miles & points earned using a credit card. This would be defeating the purpose of using miles & points to save money to travel.

Are you unsure of what credit card to apply for? Try our Credit Card Selector Calculator for FREE! It uses our proprietary algorithm which determines the best credit card in our database based on your spending habits. Try it out to compare the Chase Sapphire Preferred® Card vs other top travel credit cards and see who comes out on top!

Is It Safe to Travel?

It is always a good idea to perform a "background check" before you visit another state or country to determine if it is safe to do so. The COVID-19 pandemic has impacted travel around the world, and it has left a large footprint that is visible for all to see.

Feel free to visit our COVID-19 Resources page which contains a useful tool that will allow you to do a "background check" on the state—or country— you desire to visit. Simply enter the name of the state or country within the search bar and useful links will automatically populate providing you access to COVID-19 warnings and other travel guidance.

The Bottom Line

What we don't know can impact our bottom line. Knowledge is power. Knowing that families can work together to increase their credit card card rewards translates into saving money. What is the result of saving money—more money in your wallet.


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