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Credit Cards For High Debt-to-Income Ratio in 2021

Credit Cards For High Debt To Income Ratio

credit card advice

Adam West
By: Adam West
Posted: January 7, 2021
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Searching for credit cards for a high debt-to-income ratio may seem like an impossible task. Fortunately, some banks will consider your application for credit despite your current debt load.

These credit cards can give you some spending power to cover an emergency or to pay your bills, but you can expect to pay higher interest rates for the privilege.

The card options listed below are all unsecured credit cards, meaning you won’t need a security deposit for approval, but some do charge an annual fee that is taken from your available credit upon activation.

Cards | FAQs

Best Credit Cards For a High Debt-to-Income Ratio

Below are our top credit cards for consumers who have a high debt-to-income ratio. Each card is designed specifically for consumers who have a low credit score, which means your current debt won’t automatically disqualify your application.

And since most credit cards allow you to apply for a new account online, you may also be able to prequalify for one of the cards below before you officially apply. This can give you some indication of your approval odds without placing a potentially harmful hard inquiry on your credit history.

Surge Mastercard® Review

at Celtic Bank'ssecure website

  • All credit types welcome to apply!
  • Free access to your Vantage 3.0 score From TransUnion* (When you sign up for e-statements)
  • Monthly reporting to the three major credit bureaus
  • See if you’re Pre-Qualified without impacting your credit score
  • Fast and easy application process; results in seconds
  • Free online account access 24/7
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
See website for Details
N/A
25.90% – 29.99% (Variable)
See website for Details
Bad, Poor Credit

The Surge Mastercard® offers qualified applicants one of the largest credit limits on this list thanks to its generous credit standards and forgiving approval criteria. While not every applicant will receive a large credit limit, this card has a history of providing more spending power than the average credit card for bad credit.

Just keep in mind that the card also has one of the highest potential interest rate offerings on this list. If you plan to carry a balance from month to month, the larger credit limit could end up costing you more over the long haul.

Reflex Mastercard® Review

at the issuer'ssecure website

BAD CREDIT RATING

★★★★
4.4

OVERALL RATING

3.9/5.0
  • See if you’re Pre-Qualified with no impact to your credit score
  • All credit types welcome to apply
  • Free access to your Vantage 3.0 score from TransUnion* (When you sign up for e-statements)
  • Monthly reporting to the three major credit bureaus
  • Fast and easy application process; results in seconds
  • Use your card at locations everywhere Mastercard® is accepted
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
25.90% – 29.99% (Variable)
See Terms
Bad, Fair, or No Credit

The Reflex Mastercard® may look past your credit score and debt-to-income ratio and still provide you with access to a credit card. But you should expect to pay some pretty hefty fees for that access.

The card’s charges will include a higher-than-average interest rate and one of the largest annual fees of any card on this list. After your first year with the card, Reflex will add a monthly maintenance fee to the annual fee, which makes the card even pricier. Note that Celtic Bank, the card issuer, will waive your monthly fee if you maintain a credit limit of $750 or more.

Indigo® Unsecured Mastercard® - Prior Bankruptcy is Okay Review

at the issuer'ssecure website

BAD CREDIT RATING

★★★★★
4.5

OVERALL RATING

4.0/5.0
  • Pre-qualifying today will not affect your credit score
  • Less than perfect credit histories can qualify, even with prior bankruptcy!
  • Mobile friendly online access from anywhere
  • Fraud protection for stolen or lost cards
  • Account history is reported to the three major credit bureaus in the U.S.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
24.9%
$0 - $99
Fair/Good

The Indigo® Unsecured Mastercard® – Prior Bankruptcy is Okay offers a tiered annual fee structure that bases the yearly fee you’re charged on your creditworthiness. Depending on your credit score, you may pay no annual fee at all for this card.

But if you do incur an annual fee, it could eat up a good portion of your available credit, as this card offers a low spending limit for new cardholders.

Milestone® Mastercard® - Less Than Perfect Credit Considered Review

at the issuer'ssecure website

BAD CREDIT RATING

★★★★
4.3

OVERALL RATING

3.9/5.0
  • Prequalify for a card today and it will not impact your credit score
  • Less than perfect credit is okay
  • Mobile account access at any time
  • Protection from fraud if your card is stolen
  • Account history is reported to the three major credit bureaus in the U.S.
  • *Dependent on credit worthiness
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
24.9%
$35 - $99
Bad, Poor Credit

Milestone® Mastercard® – Less Than Perfect Credit Considered offers multiple credit cards for consumers who have a bad credit score. Each card has unique features that include a lower annual fee, a lower interest rate, or a higher starting credit limit.

Thankfully, the bank offers a prequalifying form on its website that can give you an idea of which card you may qualify for. Just make sure you read the fine print for any card before you decide to officially apply.

Total Visa® Card Review

at the issuer'ssecure website

BAD CREDIT RATING

★★★★★
4.5

OVERALL RATING

3.5/5.0
  • Checking Account Required
  • Fast and easy application process; response provided in seconds
  • A genuine Visa credit card accepted by merchants nationwide across the USA and online
  • Manageable monthly payments
  • $300 credit limit (subject to available credit)
  • Reports monthly to all three major credit bureaus
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
See Terms
See Terms
Fair, Bad Credit

The Total Visa® Card requires applicants to pay a program fee before they open the account. The first annual fee will also charge to your account upon activation. After your first year with the card, you’ll also start incurring monthly maintenance fees on top of the annual fee.

For all of those charges, you’ll likely receive a low credit limit with a higher-than-average interest rate that can make this one of the more expensive cards on the list. But if you’re in a pinch and need access to credit, Total has forgiving acceptance standards and offers fast approvals for new applicants.

Indigo® Mastercard® for Less than Perfect Credit Review

at the issuer'ssecure website

BAD CREDIT RATING

★★★★
4.4

OVERALL RATING

3.8/5.0
  • Pre-qualify for a card today and it will not impact your credit score
  • Less than perfect credit is okay
  • Mobile account access at any time
  • Fraud protection for stolen or lost cards
  • Account history is reported to the three major credit bureaus in the U.S.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
24.9%
$0 - $99
Bad, Poor Credit

You could qualify for an Indigo® Mastercard® for Less than Perfect Credit with no annual fee, based on the bank’s review of your credit profile. Thanks to a brief prequalification form, you can get an idea of your fee structure before you officially apply for the card.

Indigo will also report your balance and debt payment history to each credit reporting bureau. With responsible use, you can improve your credit score and lower your debt-to-income ratio.

FIT Mastercard® Review

at the issuer'ssecure website

BAD CREDIT RATING

★★★★
4.4

OVERALL RATING

3.4/5.0
  • All credit types welcome to apply
  • Monthly reporting to the three major credit bureaus
  • Initial Credit Limit of $400.00* (Subject to available credit)
  • Fast and easy application process; results in seconds
  • Use your card at locations everywhere Mastercard® is accepted
  • Free access to your Vantage 3.0 score from TransUnion* (When you sign up for e-statements)
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
29.99%
See Terms
Fair/Poor/Bad

The FIT Mastercard® charges a one-time program fee before you open your account and adds an annual fee to your account balance when you activate your card. After 12 months, in addition to the annual fee, you will also start incurring monthly maintenance fees.

All new cardholders start with the same credit limit. Just make sure that you pay your credit card debt in full each month to avoid the card’s hefty interest rate.

First Access Visa® Card Review

at the issuer'ssecure website

BAD CREDIT RATING

★★★★
4.3

OVERALL RATING

3.5/5.0
  • Checking Account Required
  • Reporting monthly to all three major credit reporting agencies
  • Perfect credit not required for approval; we may approve you when others won’t
  • Easy and secure online application
  • $300 credit limit (subject to available credit)
  • The First Access Visa Card is issued by The Bank of Missouri pursuant to a license from Visa U.S.A. Inc.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
See Terms
See Terms
Bad Credit

If you’re approved for the First Access Visa® Card, you’ll have to pay a program fee before the bank will send you the card. When you activate the card, the bank will deduct the annual fee from your available credit. While the annual fee you are charged goes down starting in your second year, the addition of a monthly maintenance fee makes the card more expensive.

And since this card offers fairly low starting credit limits, you can likely find a less expensive credit option if you look a little higher on this list.

Credit One Bank® Platinum Visa® for Rebuilding Credit Review

at Credit One'ssecure website

BAD CREDIT RATING

★★★★
4.0

OVERALL RATING

3.7/5.0
  • Find out if you Pre-Qualify without harming your credit score
  • Earn 1% cash back rewards on eligible gas, grocery purchases and mobile phone, internet, cable and satellite TV services. Terms apply.
  • Get a credit line between $300 and $3,000 based on your credit history
  • Accounts are automatically reviewed for credit line increase opportunities
  • Choose your monthly payment due date for added convenience, terms apply
  • With $0 Fraud Liability, you won’t be responsible for unauthorized charges
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
17.99% to 23.99% Variable
$0 - $99
Bad/Poor/Fair/Good

The Credit One Bank® Platinum Visa® for Rebuilding Credit is the only card on this list that offers cash back rewards, giving you the ability to earn money back for every qualifying purchase you make using your card. Depending on your credit score, you may also qualify for an account without an annual fee.

But if you only qualify for a card with an annual fee, the cost of the card may not be worth the cash back rewards. For example, the highest potential annual fee will require you to charge nearly $10,000 to the card each year just to recoup the cost of membership. And since each new cardholder starts with a low credit limit, you would have to max out your card 33 times to charge that much.

What is a Debt-to-Income Ratio?

Your debt-to-income (DTI) ratio is all of your monthly debt payments divided by your gross monthly income. This is different from your credit utilization ratio, which calculates how much of your available credit you’re using.

Lenders use existing debt and income to calculate your DTI ratio and gauge your ability to afford any new monthly debt obligations.

Example DTI Calculcation

To understand this better, let’s look at an example. Let’s say a consumer has several debts that require a monthly payment. She has a $400 car loan payment, a $1,500 rent payment, a $300 credit card minimum monthly payment, and a $200 student loan payment. Altogether, that equals $2,400.

This same consumer has a job that pays her a salary of $3,000 per month. She wants to take out another personal loan that will add another $300 monthly payment to her debt.

While her monthly gross income of $3,000 is more than her new monthly debt of $2,700, a lender would likely reject her loan application because of a high debt-to-income ratio. Even though she technically makes enough money to afford those debts, your DTI does not consider other expenses you incur each month. This includes food, transportation (public transportation or gas and/or tolls for your own vehicle), and other bills.

It’s highly unlikely that the $300 left over from this consumer’s salary will cover all of her living expenses. As a result, a lender is unlikely to approve a loan that a borrower is unlikely to afford.

Credit card issuers also use DTI to assess your ability to take on new debt. Using the example above, you can substitute the new $300 personal loan for a credit card with a $300 limit. Even if this borrower doesn’t max out her card every month, the bank still has to assess whether she can afford the debt repayment if she maxes it out.

That means another likely rejection.

What Debt-to-Income Ratio is Considered Too High?

Different types of lenders have varying definitions of a high debt-to-income ratio. A mortgage lender has perhaps the strictest definition, as they typically abide by the unwritten 43% rule, which states that you will automatically be rejected if your DTI is above 43% with your new mortgage loan debt payment factored in.

This means that your total monthly debt payments must not exceed 43% of your gross income. For example, total monthly debt obligations of $3,000 will require a gross monthly income of approximately $7,000 for consideration. This rule is true for a VA loan, FHA loan, and another qualified mortgage home loan.

DTI tiers provided by Wells FargoOther lenders may want a potential borrower to have a DTI ratio of around 36%. Wells Fargo, for example, lists DTI tiers on its website. It states that a DTI ratio of 35% is good and provides manageable debt in relation to the consumer’s income.

Someone with a DTI ratio of 36% to 49% is adequately managing debt but has room for improvement. A DTI ratio of 50% or more requires action, as this person may have limited funds to save or spend.

Keep in mind that couples can use their household DTI ratio when applying jointly for a credit card or loan. This allows you to add both of your incomes, but you must also include everyone’s total debt.

Depending on your combined debt and annual income figures, this can improve or decrease your DTI.

Lenders may also allow you to exceed the average DTI requirements for a debt consolidation loan. This is because consolidating all of your debts into one payment can actually save you money by lowering your monthly debt payment.

Can I Get a Credit Card With a High Debt-to-Income Ratio?

Most banks avoid risk by rejecting applications from borrowers who may not make enough money to afford the minimum monthly loan payment. But some banks work specifically with consumers who have bad credit to give them access to credit cards despite having a high DTI ratio.

Just be aware that these cards often come with higher fees to offset the bank’s risk. This may mean a program fee before the bank sends you your card, an annual fee deducted from your available credit balance, and high APRs. Some issuers of credit cards for bad credit also add monthly maintenance fees beginning in your second year with the card.

Let’s say you qualify for a card with a $300 limit. You may have to pay a program fee of around $80 to $90 to get access to your card. The bank may also charge an annual fee of around $75 to your account as soon as you activate the card. That automatically lowers your available credit to $225 and adds $75 to your overall debt load.

After your first year with the card, the bank may charge another $75 annual fee to your account while also adding a monthly maintenance fee that typically runs between $6 and $7. With the annual fee and monthly fees combined, you may end up paying as much as $159 in fees each year for access to $300 in credit.

Determine whether you really need another credit card before applying for this type of card. Use the card responsibly to improve your credit score so you can cancel the account and upgrade to a better, more affordable card in the future.

How Do Credit Cards Affect Debt-to-Income Ratio?

As with any other debt, your credit card will add to your total monthly debt and will increase your debt-to-income ratio if you carry a balance.

But since credit cards have different credit limits and a balance that changes regularly, you must use a slightly different calculation to gauge your card’s impact on your DTI ratio. While your car payment or personal loan payment will likely be the same each month, your credit card payment will vary based on the amount of credit card debt you have.

Credit Card Statement

Your DTI ratio will fluctuate as your credit card balances and minimum payments change.

To account for that potential shift, you should factor your minimum monthly credit card payment into your DTI ratio. Even if you have a $5,000 credit card balance, your minimum payment due is all you need to factor into your debt ratio.

As you lower your credit card balance, you’ll also lower your minimum monthly payment. That decrease can improve your DTI ratio and get you closer to qualifying for the loan or credit card you want.

How Can I Lower My Debt-to-Income Ratio Quickly?

The obvious answer here is that you can lower your DTI ratio by making more money or paying off your debts — but those options are not always possible.

If you want to decrease your DTI ratio without risking your job by demanding a raise, consider the following:

  • Strategically pay off your debts: Paying off debt always helps your DTI ratio — but paying certain debts can help more than others. Let’s say you have two credit cards: one with a $500 balance and a $50 minimum monthly payment and another with a $300 balance and a $75 minimum monthly payment. If you pay off your $300 balance first, you’ll wipe $75 from your DTI calculation. If you paid off the $500 balance first, you’d only eliminate $50 from your debt ratio. Make sure you calculate your bill-to-balance ratio to pay off the debts that will help you the most.
  • Use a balance transfer credit card to lower your interest rate: Many credit cards offer balance transfer deals that let you move debt from one credit card to another. This is a great way to potentially lower your monthly payment if the new card has a lower interest rate than the old card. Some cards have promotional offers that waive finance charges on your transferred debt for a set length of time after you activate your new card.
  • Take Advantage of a debt consolidation loan: This type of loan allows you to roll all — or some — of your current debts into one new loan with a lower interest rate. This can also lower your monthly loan payment, and your DTI, by consolidating several monthly loan payments into one.
  • Make some extra money with a side hustle: Whether you’re tapping into a talent or interest or just performing some labor for a few hours on the weekend, a side hustle is a great way to earn a few extra dollars to put toward your current monthly debt obligations. Just make sure you factor in any taxes you may have to pay on that extra income.

All the above options can help lower your DTI ratio and make your application more attractive to credit card issuers or other lenders. Just be sure to keep your new debt to a minimum so you don’t undo all of the hard work you put into lowering your DTI ratio.

Which Bills Are Considered in Debt-to-Income Ratio?

Your debt-to-income ratio factors in all of your monthly debt payments — including your rent or mortgage payment, auto loan payment, credit card payment, and any personal loans, payday loans, or student loan debt payments you may have.

Your DTI ratio does not consider recurring monthly payments such as your cable bill, streaming subscriptions, utility payments, or other bills that are not debt-based and can be canceled at any time.

Streaming Services

Only money you borrowed that must be repaid counts toward your DTI ratio — not monthly recurring bills such as streaming services that can be canceled at any time.

In short, if you can’t cancel the account or payment and end your debt obligation, you should factor it into your DTI ratio.

Compare Credit Cards for High Debt-to-Income Ratio Online

Your debt-to-income ratio may seem like just a number — but those digits can add up to a lot more than a simple percentage. A good DTI can unlock top credit card and loan options that aren’t available to those who have a high DTI ratio.

But even if you’re currently managing a high debt load, consider the credit cards for high debt-to-income ratio listed above as a way to access the credit you need without paying an upfront deposit or taking on other unnecessary expenses.

These cards can also help you lower your overall DTI ratio and credit utilization ratio, and improve your credit score if you pay your balances on time and in full each month.

After all, credit is a great responsibility. And you don’t want to overextend your responsibilities to the point where they get out of control. But once you grab hold of your debt load and make a plan to eliminate it, you regain the power over your financial future.

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