Credit cards for contract workers

Contract workers can sometimes find it harder to get credit than other people who have a regular job and so a regular income.  There are some types of cards that offer credit to contract workers.

The reason why a contract worker may find it harder to get a credit card than a person who has a regular job is because there is an increased risk of default.  A contract worker may usually be paid more than a permanent worker, but they are more likely on average to lose their job and so to be unemployed for a time.  If there are no savings then this can mean that the loans that have been made to a contractor may be defaulted on.

Most credit card providers have found that unemployment is one of the most likely causes for a default with debt, and this is especially the case if a person has an otherwise good credit rating.  A contractor is more likely to become unemployed, and so is more likely to default on their debt.

However credit card companies realised that if they do not serve the contractor market, with similar issues to small business owners, then they will find that their competitors will be dealing with this market.  Contractors on average tend to have higher earnings, and so also spend more.  They are also more likely to use debt to even out some of the peaks and troughs of their earnings.  This all means that they are a very lucrative market and so can not be ignored.

There are a number of credit card companies that specifically welcome contractors.  These will often advertise in trade magazines, or will have advertisements that say that they will be willing to look at contractors.  This is a good starting point.

These credit card offers will also have a slightly higher interest rate than standard credit cards.  If a contractor has an otherwise very good credit rating (the credit rating will tend to be affected by their contractor status) then they will often find it easier to get a credit card with a lower interest rate.

For contractors they really need to look at long term low interest rates on spending balances rather than rewards or no annual fees.  This is because a contractor will tend to use their credit card more often and to carry a balance on the card, and so a low interest rate will be advantageous.