While the CARD Act of 2009 was celebrated for protecting consumers, it also contained a less-discussed clause that’s now affecting stay-at-home moms (and dads): While non-working spouses could previously take out credit cards in their own names by citing household income data, the new rules, as spelled out by the Federal Reserve, require credit card companies to consider only individual income. That means anyone who doesn’t earn her own income, such as a stay-at-home mom, will have a much harder time qualifying for her own credit card.
These new rules infuriate many stay-at-home moms, who argue that they shouldn’t be forced to give up their financial independence just because they choose to stay home to raise their children. One mother of two, Holly McCall of Vienna, Va., started a petition on Change.org called, “Don’t set us back half a century! Give stay-at-home moms credit.” Almost 35,000 people have now signed it.
Rep. Carolyn Maloney, D-N.Y., argues that the rule also poses a safety threat to women in abusive relationships. In order for them to escape, she has argued, they might need their own credit cards in their own names. Maloney has also pointed out that even for women in healthy relationships, the idea of not having their own credit card represents a step backward.
Military spouses with partners deployed overseas could also find it difficult to access new lines of credit, says Tim Chen of NerdWallet.com. And if married couples with just one working spouse are forced to take out joint cards only, then untangling those accounts in the event of a divorce will be messy: Post-divorce credit problems, which are common, can usually be avoided by closing joint accounts, but in the wake of this rule, doing so could leave a stay-at-home spouse suddenly without any access to credit.
When the Fed first announced the details of the new rule, it insisted that “married women who do not work outside the home will continue to have access to credit,” largely because they can share cards with their working spouses or become an authorized user on their spouses’ cards. But as many stay-at-home spouses were quick to point out, that does not afford nearly the same level of independence as having a card of one’s own. It also suggests that stay-at-home moms might even be able to claim their working spouses’ income as their own on credit card applications, although it’s not clear whether that is a legitimate practice anywhere other than community property states.
More than two dozen members of Congress recently sent a letter to the Consumer Financial Protection Bureau asking for a closer look at this new rule and its unintended consequences. The lawmakers write that the negative impact on women is already clear: “One issuer has seen a great decline in the size of the average line of credit assigned to women as opposed to men across all approved applicants,” they wrote. In fact, women age 62 and older, who are most likely to rely on a spouse’s retirement income, experienced the steepest drop in approval rates, they added.
The Federal Reserve agrees that a study on these potential effects of the rule would be helpful, and that the Consumer Financial Protection Bureau should conduct such a study. The Bureau has said that it will explore the issue and invites consumers to share their own stories through its website, www.consumerfinance.gov. "We recognize that stay-at-home spouses have significant financial responsibilities and play an important role in the U.S. economy," says spokeswoman Jennifer Howard.
As Rep. Shelley Moore Capito, R-W.V., one of the co-signers of the letter to the Bureau and a former stay-at-home mom herself, points out, stay-at-home moms also play an essential financial role in their families, even if they're not the ones with the paycheck. She recently wrote in celebration of Mother’s Day, “Every mother runs a small business—it’s called a household. They’re price comparing at the grocery stores, finding the cheapest place to fill up the car and negotiating with doctors and insurance companies about whether their parents’ prescription drugs are covered. They’re worried about their college-aged children being able to find jobs after graduation and whether they’ll be able to pay off their student loans."
Don’t they deserve their own credit cards?