Stay-at-home spouses and partners cried out for fairness when new rules approved by Congress in 2009 required credit card companies to deny credit to anyone who had no income of their own.
Four years later, more than 16 million stay-at-home spouses and partners are finally getting some respect from the credit industry.
A new provision in the Card Act of 2009 recently won by the Consumer Financial Protection Bureau will ease the requirements for spouses or partners who do not work outside the home to qualify for credit cards in their own names.
“Stay-at-home spouses or partners who have access to resources that allow them to make payments on a credit card can now get their own cards,” said Richard Cordray, director of the Washington, D.C.-based organization. He said the final rule is an example of the bureau’s “commitment to working with consumers and financial institutions in order to ensure responsible access to credit for American families.”
Card companies are now allowed to consider income that a stay-at-home spouse shares with a spouse or partner as part of the application for a new account or increased credit limit.
As long as spouses and partners who do not work outside the home can prove they have reasonable access to household funds, they can be approved for a credit card. They will need records showing the working partner’s salary is deposited into a joint bank account or bank statements proving there are regular transfers of money going into the nonworking partner’s bank account.
“What the new rule change does is correct the unintended consequences of the Card Act that hurt stay-at-home spouses in their chances of getting credit,” said Bill Hardekopf, CEO of Lowcards.com, based in Birmingham, Ala.
One of the flaws discovered in the Card Act of 2009 after it was passed was an “ability-to-pay” provision that required credit card issuers to evaluate whether applicants would be able to make minimum monthly payments on a credit account based solely on their independent income.
Hardekopf said that particular rule was mainly included to prevent college students from getting credit cards in their parents’ name and running up high bills, which ultimately hurt both the student and parents who were going deeper into debt due to reckless spending in some cases.
What lawmakers did not realize at the time is that the rule requiring independent income penalized stay-at-home spouses. Census data indicates that more than 16 million people in America do not work outside the home.
“That equates to approximately one out of every three married couples who now may have easier access to credit cards as a result of the bureau’s amendment,” says a statement released by the CFPB.
The organization issued a proposed rule in October 2012 and received more than 300 comments from consumers, consumer groups, retailers, trade groups, banks, credit unions, card issuers and other financial institutions, which were used by the bureau in formulating the final rule.
The final rule on the amended Card Act rule has been sent to the Federal Registry and is in effect. Credit card companies will have six months to comply with the new regulations.