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Subscribe to RSSHolly McCall couldn’t believe her application for a credit card was denied. She’d never been turned down for credit before. And why should she? Her husband has a stable income and she has an impeccable credit score.
This stay-at-home mom of two, who lives in Vienna, Va., didn’t qualify because she didn’t have any personal income.
“It was demeaning to learn that I would need my husband’s permission to get a credit card,” she said. “I was not just disappointed and embarrassed, I was angry.”
Like many other stay-at-home spouses, McCall was being penalized by unintended consequences of the Credit Card Accountability and Responsibility Disclosure Act of 2009. The CARD Act requires credit card companies to determine if an applicant can make the necessary payments. This was meant to protect students and young adults from getting deep into debt.
Based on the CARD Act, the Federal Reserve issued regulations that credit card issuers should only consider the individual applicant’s income or assets, not the household income (as had been done in the past) when deciding whether to approve the application.
McCall wanted those rules changed. She worked with MomsRising.org to petition the Consumer Financial Protection Bureau (CFPB), the new federal oversight agency, to change the rule. More than 45,000 people signed her online petition.
Last week, the CFPB proposed a rule change that would allow credit card applicants who are 21 or older to rely on third-party income if they have “a reasonable expectation of access” to that money.
“When stay-at-home spouses or partners have the ability to make payments on a credit card, they should be able to obtain a card in their own name,” said CFPB director Richard Cordray in a statement.
If approved, the proposed rule change could give more than 16 million married people who do not work outside the home easier access to credit cards.
“This is a big deal,” said Kristin Rowe-Finkbeiner, executive director and co-founder of MomsRising. “Having stay-at-home parents not being able to build an independent credit history is a problem. This means people who are working at home in unpaid labor are now again able to get credit and not be left out of our consumer society where credit cards are often used.”
The CFPB’s proposed rule change is supported by the American Bankers Association. In a statement, Kenneth Clayton, the association’s vice president of legislative affairs, called it “the right thing to do.” It also has bipartisan support in Congress.
Rep. Carolyn Maloney, D-N.Y., the principal author of the CARD Act, said she is pleased with this “common sense” clarification. “It’s recognition of how modern families truly work,” she said in a statement.
Rep. Louise Slaughter, D-N.Y., ranking member of the House Committee on Rules, said this is “crucial for women who are trapped in dangerous, abusive relationships who have far fewer options if they lack an independent credit history.”
Holly McCall told me she is “thrilled” with the CFPB’s proposal and “amazed” at how quickly the agency responded to her petition
“This is a victory for all stay-at-home-parents,” she said.
Herb Weisbaum is The ConsumerMan. Follow him on Facebook or visit The ConsumerMan website.
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ok - so you have no income and you want to borrow money. what is wrong with a lending institution requiring the people they loan money to - to have the ability to pay it back! - you don't have the ability to pay it back - you have no income.!
she's embarassed that she has to have permission to get a credit card from her husband but not that she has to ask the husband for the money to pay that card? extremely stupid.
Yeah... how demeaning it must be to need permission to use someone else's income to pay for your own credit card charges.
While this rule change sounds liberating, many couples don't even consider this an issue if they combine money for bills. The higher earning partner applies for a credit card and requests two cards, one for him/her and the other for the spouse/partner. Ta dah! Mutual expenses are then tracked together.
And before someone tries to find fault with this: One person who has a credit card can get an extra card (with someone else's name on it) for anyone, it doesn't have to be a relative or partner. Granted, this doesn't build up a separate credit score, but someone can start with a co-signed account and then use that record to get individual credit.
I agree WJH, we're asking the banks to bank on someone who is not bankable because she doesn't bring home any bank!
delete
I have a question. If the stay at home spouse is given a credit card. Will the other spouse be liable for the credit card if he/she did not co-sign for it?
The answer to that is no. The stay at home spouse has no income of their own, and will fail any Ability to Pay calculation (ATP), as they should. What is wrong with a joint credit card? With a joint account, the stay at home spouse will still have that on their credit history. By modifying the ATP portion of the Card Act, students who live with their parents would also have a reasonable expectation of access to money. What's the difference?
That answer is not NO, it varies and depends on your state laws regarding martial debt. The only time this would really come up would be during a seperation or divorce (obviously she eats with her husband's money, he's not going to let her starve, of course he will most likely pay the bill). Here in Maryland the only debt that does not get considered marital is student loan debt ( becasue it can be proven as one person's debt). You are basically screwed if your spouse (working or not) wants to run up a credit card, unless they don't fight you for it in court.
Which is why marriage should never be entered into lightly......
Liars loans for the credit card industry. This will be lucrative, unless of course Obama wins. In which case 2 people paying their cards on 8 bucks an hour may prove challenging.
robin
And if the mitt wins. It will be harder at $5 an hour.
If Mitt wins you get a choice....
Get over it, YOU don't have a job and income. Geeezzzzzzzzz!!!!!!!!!
That's really not a fair assessment. If spouses agree that one works and the other stays home and takes care of the children, then both are contributing to the household. She is earning her living by caring for the children, keeping the house maintained, making the meals, doing the laundry, errands, handling most of the shopping, and often, managing the money. Make no mistake, she is working. Therefore, his income is also her income. She has earned it as much as he has.
When two people get married, they become one. By your logic, if a couple get married at 20 years of age, build up a life and a significant financial worth while he works and she takes care of the kids, then get divorced, he gets everything and she gets nothing. That is wrong. When two people marry his money is her money and, by the way, her money is his money. The rule change recognizes this reality. The only question is how the banks calculate TOTAL credit worthiness. If he has $50,000 in debt against a $40,000 yearly income, is that debt considered when calculating the wife's credit worthiness?
I can see the pros and cons in this. I believe stay-at-homes moms' have a tough job and should have the ability to care for their familys' and I applaud that, but at the same time it's diffcult to say who gets a credit card and who doesn't. Say a mom is not in a good marriage and she's seeing divorce on the horizon, the husband may be the one responsible for the credit card account if the wife bails, regardless of who's at fault in the divorce. It's a tough call.
Rep. Carolyn Maloney, D-N.Y., the principal author of the CARD Act, said she is pleased with this “common sense” clarification. “It’s recognition of how modern families truly work,” she said in a statement.
I think the Rep is out of touch, since most people I know both Parents work
Well, Dan, I see that you have taken Obama's class warfare crap hook, line and sinker. Anyone who is not like you is "out of touch." Romney has more money than you? He's out of touch (never mind that Obama has more money than you, and will make hundreds of millions of dollars speaking when he leaves the WH). Someone gets to stay at home with their children? They must be "out of touch!" When I was little, my father was a steelworker, and my mother stayed at home with us. It is called SACRIFICE. Sure, we didn't have fancy clothes or fancy cars, but we had a mother at home who was always there for us. Am I "out of touch" too? Because I don't fit your myopic worldview. Your comments sadden me, because they illustrate an inability to accept anything outside of your own worldview.
That is valid to a point, but there are still many families with a single breadwinner. This rule change treats such families more fairly. Also, since bankers support this rule change, I'd say it's reasonable.
So, joe paraceratherium, the Obama administration proposes a rule that treats families like yours more fairly, and you call it class warfare? Romney is depending on people like you to vote against youir own interests. How can you not realize that?
How do you know what my "best interests" are? Based on a comment about my childhood? Come on, man!
My "best interests" are to not saddle my children debt that will take 20 years of austerity to pay off. Is your candidate going to address that? Nope. All he's going to do is keep on villifying "the wealthy," and pretend that taxing them 3% mnore on income will fix everything. And, unfortunately, it won't. But go on and keep believing that Obama cares, simply because he says he does.
A little secret? None of them care. So please stop acting like one is SO much better than the other, because they aren't. Remember - a criticism of one is not an endorsement of the other...
So, Joe,
How is it fair for a woman with no means to pay the bank, force the bank to give her a credit card? If the wife is relying on the husband to pay the credit card, why is it not fair to have the bank have some sort of ability to pay test to give out credit cards? Force the husband to guarantee to pay the card or be a cosigner. That ANYBODY thinks this is a FAIR improvement is beyond me.
What short memories....anyone remember one of the major causes of the home mortgage meltdown we still are reeling from today? Little to no Proof of Income on mortgage applications! If the bankers and credit card companies suddenly find themselves carrying tons of bad debt because of this rule change, they better not come crying to the taxpayers to get them out of this one!
Actually the main cause was banks who saw a way to ratchet up their loan volume while offloading the risk to someone else. They created loans from thin air with money that didn't exist, it was never the fault of hardworking homeowners who borrowed too much.
@knightofdespair, I never said it was the homeowners fault, I said the lack of proof of income. This was deliberately disregarded by many mortgage brokers while they lied to borrowers about the proof of income getting verified some other way than tax returns or paystubs, etc.; then hidden by the banks for financial gain, repackaged into toxic assets by the major financial institutions, which then led in large part to the collapse, when those monthly mortgage payments could not be made. Back in the day, credit card issuers were giving out plastic all over this country, and many recipients got into big financial difficulties. Back then, there were no government bailouts, people had to deal with the problems of unbridled credit. I think we are smarter now. But this proposed rule change just plain looks dangerous to me.
As a woman, I disagree with this.
If you have no income, then no independent credit card.
I realize we say "till death us do part" - but how many marriages go the distance?
And IF they divorce, then she has a credit card that she HAS NO INCOME TO PAY. Or she'll make the spouse pay a credit card bill she shouldn't have had in the first place as she HAS NO INCOME TO PAY.
When we make choices, there are consequences. If we don't like the consequences, we make other choices. There are sacrifices and consequences to stay-at-home parents (notice I didn't say Moms only as there are stay at home Dads too), just like parents who work outside of the home.
We can't "whine" every time we have to suffer the consequences of our own, free will choices.
Let's hope it doesn't go into law. Can you imagine all the spouses that will now be responsible, in the event of a divorce, for the actions of their spouse that they are not privy too. Opening up a HUGE can of worms.
And another question...what does a stay at home Mom or Dad need a separate credit card for anyway?
While I agree it is up to a family to decide who works, and who doesn't, I also agree that while at the end of the day, she has a "job" (please keep in mind, I am a working mother of 3 children and not only maintain a household and everything associated, I also maintain a full time job outside of the home), she has no income. Her husband has the income. Depending on how you look at it you COULD say she has the income also. However, in the (likely - based on statistics) event that her marriage fails and her husband leaves her with nothing...who will pay these bills? A judge could very well say that the bills are in HER name, therefore, he is not obligated to pay them. I have been married...and divorced. I was financially dependent on my ex and it took me YEARS to get out of the hole he left me in. I'm sorry, but if you borrow the money, banks should have the right to you know can pay them back...on your own.
She does have a job and income!
Her job is raising children, the most important job in the world. She also presumably keeps the house, cooks, etc.
Her income is 50% of whatever her spouse makes. Her assets are 50% of all household assets. I'm not sure why they don't have a joint credit card account, but there's no reason she should've been denied credit. Why should she be penalized for choosing to do the right thing and stay home to raise her children? That's just wrong.
Staying at home is a privilege!
You would see this only after you leave your crying children pining for you as you have to leave for work everyday. No one I know likes to go to work in lieu of staying home raising their children. The sacrifice that is made is quite the other way around than you are seemingly seeing it.
The cost of that privilege is not having an income but sharing responsibility for the household should count and that spouse should be on a joint account (whereby building a credit profile) and if dissolution occurs then that spouse would have to show income to proceed with maintaining a credit account in their sole name.
Far too often the 'working' spouse has to pick up this tab either through assumption of the debt or payments to the other spouse.
It all depends on what she claims on her taxes.
Why not just have a joint credit card/account? If you were a bank that issues credit cards to people, would you want to give one to someone that has no paycheck coming in & no income to their name? Doesn't seem all that unreasonable to me; the credit card company is not a charity - - they are a business and need to make good business decisions.
Well, I can only speak from personal experience on this one. I have a family member who is a stay at home mom with no income of her own, she was given a credit card a few years back and whoa! She just didn't know how to handle this new found money and went a little nutty with charging stuff. The problem was, she kept this info from her husband for a long time. When he found out about her spending and recklessness he told her to end it. She didn't. It ruined their marriage big time. If you don't work, you don't deserve credit in your own name. Your spouse can get a second user card for you to use in emergencies with a set limit on it. But, I'm sure the uber liberal politicians out there will see this differently and demand that all spouses without income of their own be given credit based on their spouses earnings.
It is funny how the financial companies of this country have us fighting to use their product. Imagine if you went into Barnes and Noble and begged them to allow you to buy a book, or Best Buy and filed a lawsuit to buy a TV. They sure have the consumers hoodwinked. 'I suppose we will let you have a card, but just to be safe, we are going to charge you 19% - 29.99% and hope you default because we make all our money when you screw up'. What a great scam, aliens, bigfoot and credit card companies that care about you - three big fallacies of this century. Reminds me of Tom Sawyer and painting the fence - why should the credit card companies go out of their way to earn your business when people are tripping over themselves for the privilege to go into debt and pay millions in fees.
Creditors are not your friends. They enlist us like indentured servants, and we all do it willingly. IMy goal is to pay my house off ASAP, and pay cash for anything and everything from here on out. To hell with the banks/financial institutions. It is because of their irresponsibility that our housing market is in tatters, and yet we are left holding the bag. And while they get bonuses on our dime, we argue about which group of citizens we are going to screw with increased taxes. Government = Financial institutions = Corporations = Slave owners. None of them are concerned about us, and seek to extract what they wish from us.
Joe - seems that the world is a real scary place for you.
Creditors provide you with a product that you can choose to buy or not. Nobody as ever been forced to take out a loan, so the term 'indentured servant' might be a bit strong. If you want to pay off your mortgage and effectively invest your capital at very low interest rates, have at it. That too is your choice, albeit not a savvy financial one.
And what exactly is a Corporation, Joe? To a pessimist like you, it's a bunch of white guys in nice suits and silver hair that make too much money. But in reality, corporations are owned by and employ millions of people just like you. If you have any investments, it's highly likely that you're part owner of a financial institution. And those guys in the suits? They're the ones that are making your investment profitable.
So be careful who you're trashing here, Joe. You might just be in your own crosshairs.
This really becomes an issue if there is a death of the working spouse. The non working spouse can have a lot of trouble obtaining credit if there has not been anything is their name for many years, even if that spouse has gotten a job. Really you should not depend on credit, but when needed this can throw a wrench into things. I made sure that at my home we do have some bills in my name, even though I currently work less than my husband. Just to help with that fact.
Not that he cared, but my husband was quite surprised when 50+ years ago I got credit on my own from Haverty's Furniture and bought a china cabinet, which our son and daughter-in-law now have. It was easy as pie--just went in and filled out an app and left with a delivery date. I did have a job, though.
As I understand it, if the credit card is not joint, the other spouse is not liable for payment. I wouldn't think a non-working spouse, or any person without a job, could reasonably expect to get credit without a co-signer with a job.
If the non-working partner has an account in their own name, the other partner will not have access to that account info, unless the non-working spouse allows it.
That can become a big problem if that stay at home person has a 'take it to the limit' habit/problem. It can be difficult enough to control someone's spending with a joint account, unless you take their card away.
Twenty years ago, my ex took a personal loan of several thousand dollars. She forgot to hide/put away, a deposit receipt for the transaction. I came across it and there was no info except the date, an account number and the amount. Never even thinking that this was something she had done, I contacted the bank. Since the account was in her name only, all they would tell me was that the account belonged to her. OK, now I asked her about it. She confessed that she took out a loan so that she could open a 'savings account' in her own name. (the receipt was for a savings deposit). But now I have to pay interest as well as principle. I told her if she had wanted that, she could have told me up front, and should could have moved funds from our joint account to a private account for her.
Some years later, she got her first cell phone, also without my knowledge. Well, when the bill for the first two months was over $ 500.00 for EACH month, I wanted to make her the second woman to land on the moon. (Alice Cramden is the first).
So what do you do when you have that kind of situation?
DIVORCE!!!
I think it must depend on the community property laws in your state. In CA,a community property state, a friend of mine was getting a divorce. It was discovered that her husband had taken out credit cards in his name without her knowledge. During the divorce he quit his job and ran off to Florida with his new young thing and guess who had to pay for his credit cards? Yep, the one with the income-the wife! As for the case described in the article, if the only income is joint income, then she should be on a joint credit card with the husband. When and if she gets her own source of income, then it makes sense to get her own credit card.
When one chooses to stay home and raise the kids, they are taking a huge risk. Part of that risk is not having your own income. Many of my friends never stayed home and maintained their income: when the kids where little they worked basically for free due to daycare but it pays off in the end. They don't lose their rate of pay, seniority and their kids turn out just fine.
Umm, some of the kids turn out fine. Many do not. Everyone of my kids' teachers always told my spouse and I that they could tell our kids had a stay at home parent just based on how well they behaved and other personality traits they displayed. Now that they are older, we still get the same comments. They weren't day care brats. Not to say that ALL kids that are raised in day care settings are brats, but too many are.
And yes, if you put your kid in daycare while working full-time, the daycare is effectively raising your child(ren). That fact is not arguable. So why then, do so many working dual income parents, esp the women - absolutely VILIFY stay at home Moms? I hear it all the time from these women, calling stay at Moms everything from losers to moochers to lazy bitche$ to ladies who lunch to brain-dead parasites.
I'd say it goes both ways..it depends on many factors, not just if mom/dad stayed home. Some kids are just brats, some are sweet, etc.
With the rate of divorce, staying home is a risky decision.
I 100% agree that staying at home & raising children is a full time job. Honestly, at times it is harder work than being a skilled laborer. But, raising children is definitely one of, if not the most rewarding job.
However, why should she not have to consult with her husband regarding the card, first, since she is claiming to have access to his income? If marriage is a joint venture on all platforms, then there should be 'two' signatures required to get this credit card. Especially if a divorce happens, he will most likely be responsible for a percentage of debt (s) accrued while married. If she claims that she has access to the funds to pay the card balance, then why would she not have to prove that, getting him involved with the application process anyway.
If they're just going to send out a card based on her claiming she has access to funds, then he should not be held accountable for any of the debt (unless proven that he has used it). Credit card companies don't know individual situations! My partner and I have separate bank accounts. This way we do not have to agree on what each other buy, and there is nothing to possibly 'hide' from one another.
Maybe I missed it in the story, but who is to say that her husband had any problem with her getting a credit card in her own name. Maybe he wanted her to have one so that she would build up some separate credit history in her name only in case he dies.
Years ago, when my spouse and I consulted an estate planning attorney to get a will and other legal matters squared away, it was advised that we both have a separate credit card in our each of our own names only. It's not exactly unheard of.
FINALLY! As a mom who did stay at home to raise children, this is good news. The spouse who stays home has no standing in the world according to various businesses and government entities. I can't tell you how frustrating it was to go from a professional position to staying at home. Very disempowering... Yes, it was great to be able to stay home with our children, but it came with many, many sacrifices that I will always have to live with.
Not good news. I feel sorry for the men that have to pay the bills. On top of already caring for a family, he now needs to cover her spending habits? If you want money, get a job! If you can't afford one because you have children, you should have thought about that before starting one! I just really don't like women who rely on a man for everything. Where's your independence?! P.S. If the role was reversed and my husband was a stay at home dad, i'd tell him to get a part time job!