More than a year ago, I wrote a Bucks post about a provision of the Credit CARD Act of 2009, which was created to protect consumers but also ended up restricting access to credit for stay-at-home wives and husbands.
Now, the Consumer Federal Protection Bureau plans to propose a new rule to fix that defect, and allow credit card issuers to consider household income on applications from non-working spouses, according to testimony by bureau head Richard Cordray before a Congressional committee last month.
The law was passed in part to prevent students and young adults from getting into trouble with credit card debt, but it ended up backfiring in its impact on spouses who don't work outside the home. In finalizing the law's details after it was enacted, the Federal Reserve had said that credit card companies must consider “individual†income, not “household†income, on credit applications. That meant that in most situations, a non-working spouse couldn't obtain credit based on their husband's or wife's income, as they could previously. (There were no specific allowances for same-sex couples, and I've reached out to various parties to get clarification on where they stand now and where they would stand once the Bureau intervenes.)
The Fed, in a somewhat outdated view of who stays home with the children these days, had said it believed “married women who do not work outside the home†would still have access to credit because they could apply for joint accounts with their husbands, or become authorized users on their husband's accounts. The move was necessary, the Fed said, to make sure the person holding the card can actually pay the bill.
But some con sumers-including one who started an online petitionâ€"vehemently disagreed. So did members of Congress, who asked Mr. Cordray to fix the problem.
Mr. Cordray, in testimony before the house committee, said his agency had determined over the summer that the restriction of credit to stay-at-home spouses was “clearly an unintended consequence†of the CARD Act and was creating a significant problem that must be addressed. He said his agency would propose a fix sometime this month.
Do you think considering household income for non-working spouses who apply for credit makes sense?
