Should nonworking spouses be denied credit?
A proposal to loosen rules would allow stay-at-home spouses to obtain their own credit cards, but critics say the move could have negative consequences.
This post comes from AnnaMaria Andriotis of partner site MarketWatch.
An effort to loosen credit card standards for stay-at-home spouses would seem to benefit millions of consumers, but critics say the change could actually push some families deeper into debt and derail their finances.
Last week, the Consumer Financial Protection Bureau proposed loosening regulations to make it easier for the nation's more than 16 million stay-at-home spouses to qualify for credit cards, largely undoing more stringent requirements put into place in October 2011.
Prior to then, consumers could sign up for a credit card by stating their household income, even if all of that income came from a spouse. But the Credit Card Accountability Responsibility and Disclosure Act required the Federal Reserve to amend several lending provisions for card issuers, including a new rule that they had to ask for individual income on a credit card application and could no longer rely on household income.
If enacted, the CFPB's proposal would allow credit card issuers to ask card applicants 21 and older for income to which they have a "reasonable expectation of access," which could include a spouse's salary. The bureau says it's aware of several issuers that have denied card applications from otherwise creditworthy individuals based on the applicant's stated income.
While this change could help stay-at-home spouses who pay their bills using their working spouse's income and are financially sound, it could also cause a problem for indebted families.
Odysseas Papadimitriou, the chief executive at credit card comparison site Card Hub, points to the following example: If a working spouse with $100,000 in income and $100,000 of debt in his or her name applies for a credit card, that individual would be denied by the card issuer. (Card issuers check applicants' credit reports for outstanding debt before deciding whether to approve them for a card.)
But if the current rule is undone, that person's stay-at-home spouse could be approved for a credit card. The nonworking spouse could claim $100,000 in income, but if the card issuer were to check the applicant's credit report, it would find zero dollars of debt. "It's half the story, and it's completely deceiving," Papadimitriou says.
Not everyone agrees that this problem would outweigh the benefits, though. Some say the old rules were more fair for consumers. "Stay-at-home parents shouldn't be penalized because they don't personally bring in income," says Scott Bilker, the founder of DebtSmart.
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Simple solution: all married individuals credit card accounts should be required to be in both spouses names and credit files, no matter who works or who doesn't. Period. End of Story.
There should be no federal rules that allow or 'enable' a non-wage-earning person to a secure credit based on someone else's wages without that other person's knowledge and consent.
Also, think about it, if a married person is trying to secure credit in their name only, there is something else going on which has nothing to do with a credit card.
See, simple, like I said.
its not like those stay at home spouses could ever be expected to go without the ability to buy something they can't afford. afterall we are Americans. We are the best country in the world and everybody knows it. Our unemployed citizens should absolutely have the ability to purchase endless amounts of material possessions with no possible way to pay it back.
why even bother with welfare lets just give them all credit cards with no limits...
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