Is a new credit card regulation hurting stay-at-home spouses?

Congress wants the consumer bureau to take a look 

December 12, 2011
By Eileen Ambrose,
The Baltimore Sun

An aim of the landmark credit card reform act of 2009 was to protect consumers from getting too deep into debt. One regulation that took effect in October requires that credit card issuers weigh a consumer's "independent ability to pay" — not household income — before issuing plastic.

But now some members of Congress — including Rep. Carolyn Maloney, a New York Democrat who was one of the authors of the card act — want the Consumer Financial Protection Bureau to look at whether this regulation is having an unintended consequence. They fear that the rule is preventing nonworking spouses, particularly women, from getting a card on their own.

Their concern is understandable. Many of us are old enough to remember when it was difficult for women to get credit. As it turns out, the consumer bureau was already looking at streamlining regulations, and one of them under review is this ability-to-pay rule.

This review is needed because it's not clear whether a large number of stay-at-home parents are being blocked from getting credit or if it's a ginned-up crisis. Banks say it is a serious issue, but consumer advocates argue that it's not.

"It's a barrier to instant credit," says Chi Chi Wu, staff attorney with the National Consumer Law Center. "That's why there are some issuers and retailers that are upset."

The Federal Reserve drew up the regulation that's under fire and has defended its decision. The card act states that creditors must consider a consumer's ability to pay before extending credit. The intent, says the Fed, is to keep consumers from taking on unaffordable debt. And to do that, the Fed concludes, credit should be granted based on the applicant's income, not the income of someone who won't be legally responsible to pay the card bills.

To read the entire article, click here: http://articles.baltimoresun.com/2011-12-12/business/bs-bz-ambrose-card-act-20111212_1_credit-card-spouses-issuers