Reno Charlton, award-winning writer, shares her financial expertise as a contributing columnist for Credit Card Comparison, where you can compare instant decision credit cards.
With the news filled with stories about the global credit crunch and how it has affected lenders'' decisions about giving out credit it is little wonder that many people think that getting their hands on a credit card these days could prove impossible due to their low income levels. However, a worrying report has proven that this is not the case, and that many people with low incomes can get their hands on a wide range of credit cards, including those issued by the government.
Contrary to popular belief, the report has indicated that consumers on an annual income of less then £10,000 can actually apply for around two thirds of credit cards. Worrying, this includes credit cards issued by the Labour Party and the Liberal Democrats, which is slightly worrying given that it is these political parties that are expressing their concerns over debt levels and irresponsible lending.
There are concerns that the ease with which low-income consumers can apply for credit cards could quickly lead to further problems with more and more people clocking up huge credit card debts that they cannot afford to repay. It was found that around two thirds of credit card providers, including the Labour government and the Liberal Democrat Party, had no minimum wage restrictions in place when it came to applying for credit cards.
Whilst consumers may think that this is good news, as it could mean the chance of getting a credit card even on a low wage, what it actually means is that cash strapped consumers could easily find themselves getting knee deep in debt, and with their relatively low income they will struggle to repay that debt, which can lead to all sorts of problems in the future.
With credit card interest rates still soaring it is important for those on a fairly low income to consider whether they can actually afford the make the repayments on a credit card, even if they find that it is fairly easy to apply for and get approval for the card. It is advisable for those determined to get a card to opt for a 0% balance transfer credit card if they wish to repay over a period of time, as otherwise the interest rates charges can be crippling, especially for those on a lower income.
People who do have a poor credit history can help to rebuild their credit with a bad credit rating credit card, however it must be stressed that the high interest rates on these credit cards mean they aren''t suitable for long-term debt and should be repaid in full each month and managed well to improve your credit score rather than getting into further debt.
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