Credit Card News: Security

When the Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act) took effect in February 2010, it had an unintended impact on families in which one spouse stays home to take care of children while the other works outside the home. Household income, once looked at as a whole, was considered on an individual basis instead. That meant people whose partners earned the family income wereno longer able to qualify for credit cards in their own names.

Stay-at-home spouses who had the responsibility of managing the family finances, grocery shopping, paying bills and caring for family members were up in arms over the idea that they were seen as having insufficient means to pay off their own credit card. Arguing that the CARD Act was unfair to families in this situation, consumer advocates took their case to the Consumer Financial Protection Bureau (CFPB), which recently made an amendment to the CARD Act to fix this provision.

Now, people applying for a credit card are able to list the income from their spouse or partner on their application. Saying that they have “a reasonable expectation of access” to that income, they can count it as their own financial resource. The amendment does not require that partners be married, just that they live together and share resources.

This amendment is expected to affect the more than 16 million stay-at-home mothers and fathers in this country, allowing them to apply for credit in their own names. Consumers with good credit scores but no income of their own were being turned down for credit cards; an oversight the CFPB says they hope to correct. They first proposed amending this part of the CARD Act in the fall of 2012 and received over 300 comments on the subjects. Everyone from consumers and retailers to banks and credit card issuers had a stake in the topic, with the majority saying that stay-at-home parents, spouses or partners should be able to count household income as their own when applying for credit.

Although some spouses simply add each other to their existing credit card accounts, it is the primary cardholder who has ultimate power over the account. A stay-at-home spouse who manages the family finances and calls a credit card issuer with a question will be unable to make changes to the account or get certain information about it if they are not the primary cardholder. For this reason, it is important that both partners be able to qualify for credit cards on their own.