Skip to content
SuperMoney logo
SuperMoney logo

Annual Income For Credit Card Applications: (2024 Playbook)

Last updated 03/15/2024 by

Benjamin Locke

Edited by

Fact checked by

When credit card companies look at your annual income, they want to see your net income vs. your gross income. Your net income shows your income after taxes, retirement contributions, and other costs are taken out. Your gross income, along with your debt payments, is used to calculate your debt-to-income ratio. It’s important to give accurate information to the credit card company, as there are consequences for lying about your annual income on a credit card application.
Some people look about 10-15 years younger than they actually are and have no qualms about telling a small white lie about their age. Why say you are 43 years old when you look 29? This little white lie might be totally harmless. But lying about your annual income to someone offering you credit or a loan — that’s a completely different story.
You should always try to be as honest as possible when filling out credit card applications, including the most accurate depiction of your annual income. Credit card companies need to be sure you can pay back any debts you accumulate, so they will want to know about all of your income sources. We’ll go over how to calculate your net income and DTI as well as the consequences of not being honest about the numbers.

Get Competing Personal Loan Offers In Minutes

Compare rates from multiple vetted lenders. Discover your lowest eligible rate.
Get Personalized Rates
It's quick, free and won’t hurt your credit score

How do credit card companies look at annual income?

Credit card companies look at different metrics when you apply, such as your credit history, credit scores, and income. When credit card companies look at your annual income, they don’t just want to know the salary you make every month. They want to know about all of your income sources (your gross income), and what you receive after any costs like taxes or health insurance premiums are deducted from your paychecks (your net income).

Annual gross income

Gross income is the income you receive from all sources. This includes your job and any other side hustles or investments from which you might receive cash. For instance, you might have a salary of $50,000 per year, drive an Uber on the side for $10,000 per year, and receive rental income of $12,000 a year from a property you have in Costa Rica. In this case, your gross income is $72,000 per year.

Annual net income

Your annual net income is your gross income minus any amounts that are deducted from your paychecks before you receive them. These subtractions can include costs such as retirement contributions, federal or state taxes, and healthcare premiums.

Example: Regina’s annual gross income vs. net income

Let’s take the example of Regina, who filled out an application for a Capital One credit card. Her gross income is the same as the one above, $72,000. However, after subtracting tax, insurance, and retirement contributions, her net income is only $56,700. You can see how this calculation was done using the model below.
IncomeIncome from salary$50,000
Income from rental property$12,000
Income from side hustle$10,000
Total gross income$72,000
Health insurance premium$4,000
Retirement contribution$4,300
Total net income$56,700

Income sources can depend on age

There is actually a difference in what counts as income depending on if you are over 21 or 18-21 years old.

21+ (most adults)

The following items can be included as income for any adult over 21 years old:
  • salary
  • allowance and gifts
  • investment income (real estate, finance)
  • trust fund distributions
  • alimony and child support
  • Social Security and pension income

18- to 21-year-olds

In many cases, 18–21-year-olds will be students with student loans. Student loans do not count as income, but extra scholarship money can count as income. With 18- to 21-year-olds, only personal income that they earn themselves can be counted as income. Even if your parents deposit huge sums into your bank account, unless they are a co-signer on a personal credit card, that will not count as income.

Pro Tip

If you are married or living with a partner under common-law marriage regulations, then you can include their income on the household income portion of your credit card application. This has only been the case since 2012. However, you will still need to provide granular details about your personal and household income.

Why do credit card companies want so many details?

Credit card companies want to know the exact situation of your finances. This ensures that your income and expenses are well within the parameters that will enable you to pay back your credit card debt or loan.
Another metric they use is your debt-to-income ratio or DTI. To calculate your debt-to-income ratio, lenders will look at your total debt payments compared to your gross income. This ratio is incredibly important when it comes to any type of lender doing due diligence before extending credit.

Regina’s DTI example

Most lenders want to see a debt-to-income ratio of 43% or below. Does Regina fit the bill? Let’s take a look.
Type of debtAnnual total
Car payment$3,600
Student loan$1,800
Credit card bills$900
Total debts$24,300
Regina’s debt-to-income ratio of 33.75% ($24,300/$72,000) is below the cutoff for what is deemed a good debt-to-income ratio. However, she would not want to increase her debt load by much unless she starts making a higher salary.

Why income is crucial on your credit card application

Here are some more reasons why your net income and gross income are so important to lenders.

They would like to get paid back

Obviously, credit card companies’ tactics are in the interest of getting paid back, and thus a healthy DTI ratio is a must. They can only ascertain your ability to pay back additional debts by fully looking at your incomings and outgoings to get a picture of your current financial situation.

Government regulation as a result of predatory lending

Government regulation also plays a role. The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 states that credit card companies MUST delve into the income of their applicants to make sure that they will be able to afford payments.
Notice the date, 2009. This was part of sweeping legislation to protect people from the type of predatory lending that was pervasive during the financial crisis. Credit card companies need this data not only for their own risk parameters but to keep up to date with government regulations as well.

Don’t lie on your credit card application

If you lie on your credit card application, the punishments can go from mild to severe. Here is what can happen if you fib about your finances.

You take on too much credit you can’t afford

The credit card company will base the credit limits they give you on your net income and DTI. If you lied about any of your numbers, you could receive a higher credit limit than what you are prepared to take on. This could lead you to delinquency on your payments and possible bankruptcy. Timothy Ford, a Certified Financial Planner, says, “I’ve seen clients who have such massive credit card bills that they can’t plan for retirement. Credit cards come with big interest payments, and taking out too much credit can end up in chunks of income being dedicated to pointless interest payments.”
Fortunately, there are ways to dig yourself out if you have reached your credit limit. Phil Weiss, a Chartered Financial Analyst (CFA) and CFP with Apprise Wealth Management, has personal experience. “One of my first clients came to me with pretty crazy amounts of credit card debt,” he says. Fortunately, they had good credit. They just weren’t paying enough. I started by recommending they get a 0% interest rate credit card. They identified some choices, and I helped them pick the best one (based on the amount of time the rate remained at 0% and the upfront charge they had to pay). They paid off that balance while the rate remained at 0%. I also suggested that they use the avalanche method to repay the other balances (starting with the highest interest rate and working their way down from there).”

You get hit with loan application fraud

Loan application fraud is some serious business, and the subsequent punishments are harsh. You could end up paying an insane amount of penalties and even spending some time in the clinker. The maximum penalty for loan application fraud is 30 years in prison. That’s right, 30 years! You could also face up to $1 million in fines.
Honestly, we highly doubt that you’ll be locked up for 30 years because you lied about your income on a credit card application. That type of jail time would most likely be a result of significant loan fraud. That being said, any type of criminal record can be a massive hindrance to your ability to get a job or credit in the future.

Start the application process

Ready to find the right credit card? Gather up all of your income and debt-related documents and use our tool to compare your options for personal credit cards.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

Loading results ...


What should I put as my annual income for a credit card?

If you are not sure, you should put your gross annual income if a credit card issuer asks for “annual income.” This should include income from your salary as well as any side hustles.

Do credit cards check your annual income?

Yes, there are a few ways that credit card issuers can check your annual income and verify it. They can do financial modeling themselves to find out if the numbers that you put in your application make sense from a financial perspective. They might ask to see employment contracts and pay stubs. In addition, credit card approval can be more difficult for those with poor credit. Some credit card issuers might request to see more detailed financial documents, such as bank statements.

What counts as annual income?

For 18- to 21-year-olds, it’s basically any personal income that doesn’t come from student loans or your parents. For adults over 21, it consists of:
  • salary
  • income from side jobs
  • allowance and gifts
  • investment income (real estate or finance)
  • trust fund distributions
  • alimony
  • child support
  • Social Security and pension income

How do I calculate my annual income?

You calculate your gross annual income by adding up all of your income sources. You then calculate your net annual income by subtracting any payroll deductions, such as taxes, insurance, and retirement contributions.

Can you get a credit card without an annual income?

You will need to list some type of income, even if you are unemployed. However, if you get a co-signer on your application and they have decent credit and financial metrics, then you can also access a credit card. A credit limit increase could also be difficult if you don’t have any income to prove you deserve an increase.

Key takeaways

  • When credit card companies look at your annual income, they want to see your net income (after payroll deductions) vs. your gross income.
  • They will also want to see your debt payments compared to your gross income to calculate your debt-to-income ratio.
  • For adults 21 years and up, most income will be included in your gross income, such as retirement income and side hustles.
  • Don’t lie about your income or liabilities on your credit card application. In a best-case scenario, you will receive so much credit that you overspend, and in a worst-case scenario, you could end up in prison.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

Loading results ...

Share this post:

You might also like