There was a provision in the Credit Card Act of 2009 that was meant to keep young men and women from getting into debt. This was a provision buried in the Act’s fine print that required the credit card providers to calculate whether applicants could make minimum monthly payments given their debt obligations and independent income. It was intended to stop young adults and college students from using the income of their parents to get a credit card and then run up a lot of debt in their names.
Department of unintended consequences
What this boiled down to is that to get a credit card, college kids had to show they had income of their own. Unfortunately, this provision had the untended consequence of impacting 16 million spouses who stay at home and who have no reportable income. As you might guess, it didn’t take long for those spouses to become outraged.
New legislation proposed
As a result of this outcry, the recently created Consumer Financial Protection Board (CFPB) has recommended new rules to reverse this part of the Credit Card Act and allow stay-at-home spouses or partners to rely on shared income when they apply for a credit card instead of having to show individual income. One CEO for a company that specializes in providing information about credit pointed out that in this day and age, when 50% of couples get divorced, it’s important for both spouses to be able to access credit cards. This person pointed out that there could easily be a situation where one of the divorcing spouses would have no credit history and not even be able to rent an apartment as most landlords do credit checks.
Not everyone agrees
The CEO of another credit card comparison company said he felt this would be a recipe for trouble. He pointed out that if people are allowed to report income that is not theirs, underwriters will not be able to calculate how much of the income has been spoken for and how much is available for new credit card payments.
A better answer
Some members of the credit card industry have said that a better answer would be to require the credit card companies to take joint applications. This would allow those companies to evaluate if a couple’s joint income and obligations would allow them to afford a new line of credit. This probably wouldn’t totally solve the issue of household equality or provide independent options for people in abusive relationships, which is why underwriting rules should be adjusted for secured credit cards.
Why not a secured card?
As one expert pointed out, if a credit card applicant can put a deposit for a secured card, he or she should be approved. A secured card would be on the person’s credit line, issuers will know they will get paid back and stay-at-home spouses would have an independent way to spend and build a credit history.
We could help
Today, credit and credit cards have become a way of life for most people. In fact, the US may be the most in-debt nation in the history of the world. It’s sad but true that some people have let their debt get totally out of control and take over their lives. If you’re one of these people, we can help. Our debt consolidation providers have helped thousands of people just like you get out of debt in a reasonable amount of time and with a payment plan they were easily able to afford. Call our toll-free number or fill in the form on this page to learn how we could help you slay that dragon of big debt.