Do stay-at-home moms and dads need their own credit cards? According to the federal government, the answer might well be no. At issue is a proposal by the Federal Reserve that seeks to make sure that those receiving credit can actually afford to pay their bills. Currently, credit applicants are judged by their entire household income-in other words, the salaries earned by both partners. Under the proposed regulations, that would change. Instead, applicants would need, according to a report in The Wall Street Journal , to demonstrate “independent” income. If they can’t do that, they would likely be automatically denied unless they applied jointly with their income-earning husband or wife.
The possible change is expected to have a particularly large impact on those non-working spouses-who are, of course, mostly female-seeking to increase existing credit lines or applying for instant credit from retailers. Not surprisingly, the first to cry foul were the chains that make beaucoup bucks by issuing such immediate in-store credit (complete with often exorbitant interest rates) to consumers. “Demeaning” howled David Jaffe, the president and chief executive of Dress Barn, in a letter commenting on proposed regulation to the Federal Reserve last month. Other retailers have opposed the changes as well, including The Limited and Home Depot, whose vice president of financial services wondered (also in a letter to the Fed) how women would fare if their homes need “emergency repairs.”
At first glance, it all sounds somewhat ridiculous. What, after all, qualifies as an emergency at Dress Barn? A pantyhose run? But, no matter how self-serving the retailers’ motivations, these stores and their executives have a point. It wasn’t so long ago that women were denied all independent access to banking, credit, and other financial services without their husbands’ permission. This changed with the Equal Credit Opportunity Act in the 1970s, something we now so take for granted that it almost never occurs to us that a woman’s right to her own credit and credit history is a relatively new phenomenon. It’s so new that many of us over the age of 40 can actually recall our mother’s first individual credit cards and the reverence with which those cards were treated. (In our house, my mother’s first individual card was from Macy’s, a store she eventually would go on to work for as a saleswoman for almost a decade.)
So what gives? Is the Federal Reserve really intent on rolling back women’s rights? Apparently not. Instead, stay-at-home parents (and other unemployed spouses) are potential victims of well-intentioned language contained in the 2009 Credit Card Act. This part of the act was aimed at stopping the practice of getting credit cards into the hands of college students, as necessary a bit of legislation as there ever was. While consumer advocates are generally not fans of instant credit, this is no way to tackle the problem of Americans taking on debt they can’t repay.
Woman holding a credit card by Hemera Technologies.