Do I have to update my income for my credit card issuer?

If you’re like most adults, chances are you’ve applied for one or more credit cards in the past and know that showing your income is a requirement during the application process. In fact, credit card issuers are required by law to request financial information (including income) on credit card apps to ensure that a consumer earns enough to pay for their purchases.

But what does it mean when your bank or credit card issuer asks you to update your income after you’ve already been approved and are using your card? Is it worth worrying about? Is it a requirement, like when you first apply, or is it voluntary? Is it appropriate to update income information? Here are some of the most common questions that come to mind the minute you get a message from your bank asking you to update your income, and we’ll cover them all below.

Why is my credit card issuer asking for updated income information?

In the past, banks were allowed to issue lines of credit to any person solely on the basis of their credit rating. This means they didn’t take into account how much you earned and whether or not you could pay for your purchases. But so many people accumulated massive credit card debt that they couldn’t pay off, resulting in a heavy blow to their credit ratings and banks had to write off the debts as losses.

To prevent this from happening, the government passed several regulations, one of which was the Credit Card Act of 2009, which established the rule that issuers must verify the consumer’s ability to pay before opening new accounts and opening new lines of credit. . This is why you must provide information about your income during the credit card application process.

However, no law currently requires credit card issuers to track your earnings over time, so why are they asking for an update?

You have nothing to worry about if your bank or credit card issuer asks for updated information about your income. This does not mean that something is wrong or that they suspect that you are earning less than you used to (even if it is).

The most likely reason your credit card issuer asks for this information is to assess whether your credit limit and credit card rate are appropriate for your current financial situation. Based on your updated income, they may consider increasing or decreasing your line of credit, or perhaps offering new products or services.

Do I have to report my income to my credit card issuer?

Now that you know why your bank needs this information, you are probably wondering if you should provide it to them. The answer is no, you don’t need to. Providing updated income information to your credit card issuer is strictly voluntary.

However, since increasing your credit line requires the bank to verify your solvency, they will not be able to automatically grant you a higher credit limit unless you upgrade your income (if it has increased, of course). .

So, although it is voluntary, the question remains whether you should update your income. There are situations where it makes sense, and there are situations where it doesn’t.

When does it make sense to update your income?

The only scenario where it makes sense to update your income is when it increases. However, this may not always be necessary. Let’s say you’re making more money than when you applied for a credit card and you’re interested in increasing your credit limit. In this case, you must update your income with your bank, especially if the bank has requested it. This makes it more likely that you will be approved for an increase in your credit limit in the future, either automatically or upon your request.

However, even if your income has increased, if you are not interested in increasing your credit limit or applying for new financial products with your bank or credit card issuer, then there is no need to update this information. In fact, it may even be better to keep it lower in case you run into financial problems down the road, as a lower recorded income will make it easier for you to negotiate better payment terms if needed, among other things.

When does it make sense to update your income?

On the other hand, if your income has dropped since you opened your credit card account, it’s not a good idea to renew it. The reason is that if you report a lower income, there is a chance that your credit card issuer will lower your credit limit as well. In addition to not having access to the same purchasing power, a lower credit limit can also hurt your credit score because it increases your credit utilization rate even if you have the same balance as before.

What happens if you don’t update your income when your issuer requests it?

There are no direct consequences if you don’t update your income. Remember that this is not required by law and your issuer will not take any action against you, such as closing your account, lowering your credit limit, or raising your rates. The only real potential impact is that you may be less likely to increase your credit limit or miss out on new products or services that may be of interest to you.

How to update your income with a credit card issuer

If you choose to go for it and respond to your issuer’s request for updated earnings information, the process is fairly straightforward. You can do this in two ways:

Through a support representative

For some, the easiest way is to call the customer service number on the back of your credit card. Once you contact a customer service representative, they will update the information for you. Just make sure you have all your personal and account information in order to make the process go smoothly.

Through an online credit card account

For all those digital natives, it may be easier or even more natural to update information through your credit card mobile app or website. While the process varies slightly from issuer to issuer, it usually involves:

1. Login to your online account
2. Go to your profile and then to the personal information section.
3. Selecting an income update option
4. Enter your new annual income
5. Clicking the Refresh or Confirm button

bottom line

It is up to you whether you want to update your income information. Keep in mind that this is a very simple process and there may be some benefits to this, such as increasing your chances of increasing your credit limit.

But if you’re not interested in it, or if your income has gone down since you opened the account, don’t feel compelled to do so. In any case, remember that this is not required by law and you will not face any consequences if you do not respond to the issuer’s request.