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Should Stay-at-Home Spouses Get Their Own Credit Cards?

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 their spouse. But the Credit Card Accountability Responsibility and Disclosure Act required the Federal Reserve to amend several lending provisions for credit card issuers, including a new rule that issuers 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 over 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, chief executive at credit-card comparison site CardHub.com, 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: that person could claim $100,000 in income, but when the card issuer checks 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. 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, founder of DebtSmart.com.



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Comments (5 of 11)

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    • I don’t understand the mentality of all this.

      How do stay at home spouses think they can have a separate financial record when they have no real income? Either they are dependent on the bread winner of the couple or they are not “stay at home.”

      Why the need to have “your own” credit card if you are ultimately 100% dependent on your spouse anyway? Do these couples structure their finances formally? Is the stay at home spouse formally “paid” by the other? Does he/she report this “income” to the IRS and does the paying spouse report the payment to the IRS through a structured business arangement? It’s nuts.

      Take your “other half” with you to the bank and have them co-sign. Then go home and realize that the two of you agreed to be *partners* for the rest of your lives, not just roomates.


    • Personally, I think all non-working spouses should have a credit card to build their own credit history. Again it’s impossible to protect everyone from themselves. If people act in stupid ways with their money and debt, that’s their problem.

    • What’s the point of having laws passed if the Consumer Financial Protection Bureau can undo them without the congress voting?

    • It is important that a stay at home spouse have their own credit rating. My Sister’s husband was always the “bread winner” and was suddenly killed in a train accident. My Sister had no cash money, access to bank accounts was limited and all the “credit” died with him, she had no credit history and she was still liable for all the bills. Think it out and prepare for such.

    • Here’s a crazy idea- how about credit card issuers (who have a large stake in whether they get paid back) come up with their own rules about assessing the creditworthiness of borrowers rather than Government (which has no stake in whether the borrowers repay) doing it.

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