Can I Have Credit Cards on SSI? The Tips You Need

What if you had financial options you didn’t even know about?

When you receive Supplemental Security Income benefits, it can be challenging to navigate your finances. And it can be even more challenging to understand the various rules and restrictions surrounding SSI benefits.

For example, you may have asked yourself, “can I have credit cards on SSI?” And you may be surprised to learn that the answer to this question leads to more questions!

Wondering if you can get a credit card on SSI? Then keep reading to discover the answer!

Can I Have Credit Cards On SSI?

Our guide is going to touch on many aspects of both SSI benefits and your credit. But first, we need to answer the big question: “can I have credit cards on SSI?”

The short answer to this question is “yes.” Strictly speaking, there are no restrictions that keep someone on SSI from getting and using a credit card.

The longer answer to this question is “yes, but it’s not always easy.” That’s because you will run into interesting issues with credit cards and how the government defines “income.” And many on SSI benefits discover very quickly that it is difficult to get a credit card in the first place due to income restrictions and potentially low credit scores.

Here’s the good news, though: we’re going to walk you through everything you need to know to get a card, use it responsibly, and avoid putting your SSI in danger! 

Qualifying For the Card

So, the good news is that nothing legally prevents you from getting a credit card while on SSI. But before you start filling out that credit card application, you should know the bad news is that you may have trouble qualifying for the card.

For example, qualifying for a card in the first place may be difficult because of the credit score requirements. In addition, if you have poor credit or just a lack of credit history, it can be challenging to get a card.

Additionally, lenders also consider your annual income before approving most credit card applications. Unfortunately, those on SSI benefits typically don’t have a high annual income, making it even more challenging to get a credit card.

Our recommendation is to ask your existing bank or credit union about credit card options. Regardless of your credit or income, you’ll have an easier time getting them to approve the card than someone else. You should also ask your lender if they offer secured credit cards because these will be easier to qualify for, and the smaller credit limit on a secured card will make it harder to fall into deep debt.

Using Credit On a Fixed Income

Let’s say that you qualify for a credit card. Before you begin using it, you should strongly consider the realities of using credit while on a fixed income.

Most people use credit cards when they don’t have enough money to pay for something out of pocket. While it’s OK to have an “emergency credit card” for this kind of purpose, you need to keep a severe eye on your debt, especially as you wrestle with things like utility bills.

That is because lenders will only require you to make minimum credit card payments. That amount may not look like much, but you could be making these payments for decades, depending on your debt, and you could end up paying much, much more than the number on a credit card statement.

So once you have a credit card, be careful to strongly consider the scenarios where you use it. And make sure you don’t use the credit card at all if you don’t have to.

Now that you know a bit more about getting and using a credit card while receiving SSI benefits, let’s take a closer look at how the card and your benefits will interact.

The Question of Income

The Social Security Administration doesn’t calculate your SSI benefits in a vacuum. Instead, they consider multiple factors, and one of the primary factors in question is your income. And the SSA calculates income in some surprising ways!

As an example, “income” is not simply income that you make via employment. Instead, “income” may be considered any additional money that you use to pay living expenses.

How does this factor into you using a credit card while receiving SSI benefits? If you should get too far into debt, you might have a kind friend or family member offer to pay your credit card bills for a time. While this is very generous, you (and they) should know that such money from a third party may count as income, even when it’s used to help low-income families.

Generally speaking, it is OK for those on SSI benefits to get occasional help paying down credit cards. But in the long run, it’s essential to make sure this arrangement does not upset your existing benefits!

Understanding “In-Kind Income”

Previously, we reviewed that the SSA has an expansive definition of “income.” That is because they also consider “in-kind income,” which is simply a term for something that you can use to obtain food or shelter.

Regarding this, money someone else uses to pay your rent or buy your groceries counts as in-kind income because they directly helped you get food or shelter. 

With this in mind, you should know that not every credit card purchase goes towards food or shelter. So if someone is helping you pay a credit bill, and the credit was used to pay for medical bills or hardware supplies, that does not count towards your income. But if you use credit to buy groceries and someone pays the bill, this counts as in-kind income.

How Credit Card Gifts Can Affect SSI

If you are on SSI benefits, your friends and family may try to help you out by giving you credit card gift cards. These are prepaid cards that function more like debit cards because they are limited to the amount of money “loaded” onto the card. But instead of having to spend the card at only one place like you would with a gift card, you can spend it anywhere that takes that brand of card.

The sheer versatility of these prepaid cards is part of what makes them so popular. However, such cards are always considered part of your income in the eyes of the SSA. That’s because regardless of what you do with the card, you could potentially spend the money on food and/or shelter.

However, if your friends or family give you a gift card that cannot get food or shelter (such as a gift card to a local clothing store), such a card will not be counted as income by the SSA.

The Importance Of Your Credit Score

Pop quiz: do you know what your credit score is? If the answer to that is “no,” you may want to get a free credit report online before you end up applying for a credit card.

Credit scores can vary quite a bit. On the low end, pretty much anything from a score of 300 to 579 is considered “poor credit.” And this goes all the way up to the 800 to 850 range, which is considered “excellent credit.”

Why is your credit score so important? Many lenders have a minimum credit score requirement for someone to qualify for a card. So if you have a low score and don’t work on improving it, you may not be able to get a card at all!

Improving Your Credit Score

Previously, we reviewed the simple fact that you are more likely to get approved for a credit card from your existing bank or credit union. That is because they will factor in your banking relationship on top of your credit score. And you may be able to more easily get a secured credit card that is “secured” by an initial deposit, thus requiring no credit check.

Regardless of how you pursue your credit card, you may want to work to improve your credit score. After you get a free credit report online, you can formulate a game plan for improving credit.

First, review the report for accuracy and call the credit bureaus if any information is incorrect or out of date. Simply cleaning up errors in your credit history can instantly boost your score.

Second, start focusing on paying off debt if you have any existing debts. Paying off loans, credit cards, and other debt can help you dramatically improve your credit score.

Finally, consider setting up an autopayment on your credit cards and loans. Missed payments can easily drag your score down, but autopay can ensure you never miss a payment, increasing your overall score.

Your Next Move

Now you have an answer to the question, “can I have credit cards on SSI?” With that answer in hand, it’s essential to control how much money you spend on a fixed income and avoid expensive and unnecessary debt.

Save Money on Your Wireless Phone Service

If you qualify for SSI benefits, you also qualify for Lifeline service. Lifeline is a federal benefit program that makes it possible for low-income consumers to receive access to free or heavily discounted communication services. Click here to find out more and apply for this valuable benefit.

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