What income is considered for a credit card application?

First of all, it is the credit card networks (Visa, American Express, Mastercard) that require it from their partner financial institutions (American Express Canada, BMO, Desjardins, National Bank, etc).

These networks require a minimum income to issue credit cards to customers.

For example, a World Elite Mastercard requires a personal income of $80,000 or a family income of $150,000, regardless of the institution that issues it. Like these cards for example:

• National Bank World Elite Mastercard
• HSBC World Elite^®Mastercard^MD
• BMO Ascend World Elite Mastercard

Then, a Visa Infinite credit card will require a personal income of $60,000 or a family income of $100,000, regardless of the institution that issues it. These include:

• RBC Avion Visa Infinite Card
• BMO eclipse Visa Infinite* Card
• TD Aeroplan^® Visa Infinite^® card

These income criteria are requested by merchants. Every time a merchant makes a purchase with a credit card, an interchange fee is charged.

The more premium the credit card, the higher the interchange fee, as the customer is more likely to buy more from that merchant.

In addition, financial institutions want to ensure that the person has the financial means to pay off the credit card.

So, if you don’t have the minimum income required when applying for a credit card, you will be automatically declined. Even if you have an excellent credit rating!

Each financial institution makes its own interpretation. But the vast majority of the time, the income requested for a credit card includes the following categories:

• Salary (gross income) from one or more employers or self-employed
• Income from retirement or pension funds
• Government benefits (support for children, disabled persons, employment insurance, QPIP, CNESST, etc.)
• Alimony
• Assets or interest on investments (savings account, investments or guaranteed investment certificate)
• Rental income or royalties received at regular intervals
• Family allowance or scholarship (a student loan is not eligible)

A person with little or no income or who is unemployed can still own a credit card. Institutions then consider family or household income.

A family or household is a group of adults living in the same house or apartment. These people are related by blood, adoption, marriage or common-law.

In this case, the financial institution will ask to calculate the family income from all the income sources listed above, for all the adults in the household.

For example, a student aged 18 or over who lives with his or her parents can apply for a credit card on his or her own behalf. Then he can enter his individual income and add his parents’ total income as well as his own in the family income box. It’s the same principle for a stay-at-home mom and her working partner.

The financial institution will then determine the eligibility of the application, taking into account financial obligations and debts.

This may vary for each financial institution, but the documents requested are as follows:

• Confirmation letter from employer with income
• Recent pay stub
• Canada Revenue Agency Notice of Assessment
• Bank statement

“Embellishing” or intentionally misstating one’s annual income is false reporting and fraud. This is a criminal act, according to the Criminal Code.

Income verification can be requested at any time, even if the credit card was opened months or years ago.

If, despite everything, the person subscribes to the card on a lie, there is an insurance claim with this card and the truth comes out, the payment of the indemnity will be refused.

Your relationship with the financial institution may end without warning, with the account being closed. The credit card balance can be requested to be paid immediately and the institution even has the right to contact the police.

With every credit card application, the financial institution takes a risk.

The latter wants to know if they can trust and if the future incumbent is capable of repaying them. It must therefore satisfy its own criteria, those of the networks and merchants, all at the same time!