Annual Income for Credit Card Applications: Everything You Need to Know

Susan is a freelance writer who specializes in turning complex financial topics into engaging and accessible articles. She's been writing about personal finance for six years, and was previously the senior writer at The Penny Hoarder and a staff writer at Student Loan Hero. Her personal finance writing has also appeared in publications like MarketWatch and Lifehacker.

Do you remember applying for your first credit card? Didn’t it feel so official filling out all those little boxes and picturing the day that shiny new card with your name on it would show up in the mail?

Yes? If you’ve applied before then you probably also remember seeing the questions about your annual income and feeling a bit puzzled.

Or maybe you haven’t applied for credit yet because you’re fresh out of school and earning minimum wage, or perhaps not employed yet. How do you answer questions about income if you don’t have much yet … or any?

You’re likely wondering things like, “What is a good annual income to declare to get a credit card?” or “Can I lie about income on a credit card application?” (Spoiler alert: Not ever recommended!)

Credit card veterans may feel they could have done better with those applications and may still have questions. Or if you’re a newbie in the anticipation stage, you may be wondering how to apply for a card but aren’t sure how. Maybe it’s even holding you back from applying.

Well, we have some ideas about what to do if either scenario sounds like you. Read on to explore ways to talk about your income on credit card applications when income is skimpy or hiding just around the corner.

Why Do Credit Cards Ask for Income on Applications?

Credit card issuers aren’t asking about income because they’re being snoopy. The truth is they’re being legally responsible and following the Credit CARD Act of 2009. Credit issuers are legally obligated to ask for your income, as they can only lend you money if they’re confident you can make your payments.

While the law doesn’t indicate a specific income requirement, it does state that banks can only lend you money if they’re confident you can make your monthly payments. And to do that, they need to know how much money you’re earning.

Aside from fulfilling their legal duties, your income levels also help credit card companies decide how high your credit limits should be. Because, like the government, they want to ensure you can pay them back and part of this means not extending to you more credit than is warranted.

Say your salary works out to about $5,000 per month. With that amount, a $2,500 credit line seems reasonable — even if you maxed it out, you’d be able to pay it off in full each month. (Which we always recommend to avoid interest and help improve your credit scores!)

But if your take-home salary is $2,000 per month, a $2,500 credit line would probably be way too much. You’d be at greater risk of defaulting on your card than in the first scenario.

Keep in mind that different card issuers have different standards for creditworthiness. Super Express Bank might feel comfortable giving you higher credit limits than Duper Express Bank, for instance. (Obviously fake bank names for this example.)

If your current issuer wants your income, they may be considering a credit limit increase. If you get the increase and don’t increase your spending, your credit utilization will drop.