NEW YORK (CNNMoney) -- After nearly five years managing her family's finances, Holly McCall, a 34-year old stay-at-home mother of two from Vienna, Va., never thought she would have trouble getting a credit card.
She makes the majority of family purchases, has an excellent credit score and has been approved for several cards in the past. But when McCall applied for a Target card last fall, she was denied.
She blames that denial on a recent Card Act rule.
The law was passed in 2009 to protect consumers from unfair and deceptive credit card practices. But some stay-at-home parents argue that a Card Act rule that took effect last October has made it harder for them to get approved for credit cards.
Aiming to protect consumers from racking up too much debt, the Federal Reserve now requires credit card issuers to consider individual income from applicants instead of household income.
Moms: 'I can't afford to work'
As a result, stay-at-home parents who rely mainly on their spouse's income have a harder time getting approved for credit cards on their own.
"I think it's demeaning -- I don't want to ask my husband's permission for a credit card," McCall said. "Just because I don't get a direct paycheck for [my work], doesn't mean it's not worthwhile work that I'm doing."
Outraged by the new requirements, McCall created an online petition at Change.org a couple weeks ago and has already received more than 30,000 signatures -- many of which are from other stay-at-home mothers and fathers.
"I used to be CEO of a small software consulting business and am now staying at home to take care of a toddler and first grader. If you had to pay someone to do what I do now, it would cost you at least $120,000, which is a lot less than what I used to earn," one stay-at-home mom wrote on the online petition. "BTW, it's a 24x7, not a 40 hour per week job. Don't you think I should be allowed to get a credit card on my own?!"
On Tuesday, McCall said she and about half a dozen other petitioners delivered the signatures in thick binders to the Consumer Financial Protection Bureau in Washington, D.C.
Some petitioners dressed up as housewives from the 1950s -- complete with A-line skirts, pearls and tightly pulled back hair -- since the rule "feels like a flashback to the 1950s because of the way women aren't empowered financially." One petitioner held a sign in the shape of a credit card with the word "DENIED" stamped on it in red.
McCall said she hopes the petition will push the CFPB to amend the Card Act rule in order to protect the rights of all stay-at-home parents -- both moms and dads alike.
Stay-at-home dads: More men choosing kids over career
"It's about fair and equal access to credit," said McCall.
The CFPB inherited the Card Act rules from the Federal Reserve last summer, when the bureau was launched.
The agency said it is looking into the issue.
"We recognize that stay-at-home spouses have significant financial responsibilities and play an important role in the U.S. economy," said CFPB spokeswoman Jen Howard.
"I think it's demeaning -- I don't want to ask my husband's permission for a credit card," McCall said. "Just because I don't get a direct paycheck for [my work], doesn't mean it's not worthwhile work that I'm doing."
If you're looking for validation of your life choices from Target's finance department, you're in trouble.
It sounds like the CC companies' hands are tied by this newly-passed act.
In the event the working spouse doesn't know of this credit card and is off spending the HHI without knowing- this would be a major issue. These regulations are in place now simple that to make sure you can open a credit card with a known income. Protects lots of people, you, spouse working..I can think of a lot of people that used to "hide" debt from their spouses since they could get CC's on their own, just because their husbands worked... You can't get a mortgage for a house just on a promise you will pay, its the same in this regard. I don't see any issues with this, HH debt, etc- everyone should discuss this anyway, thats just how I see it. Mind you when I went to get my mortgage 6 years ago I was told my income would not be included and thankfully DH had a good salary- since the stats said I would stop working...Is this fair no? But someone has to continue working to make the money to pay these bills. Just covering their ass in the long run.
Yeah I can't get up in arms about this. If you can't show an income you don't get credit. If you want a card so bad you should apply with the working spouse.
Yeah I can't get up in arms about this. If you can't show an income you don't get credit. If you want a card so bad you should apply with the working spouse.
This. A huge part of our debt issues as a country are because people were able to take out credit when they either didn't have any income or not enough to make payments. It sucks that this rule inadvertently hurts SAHPs, but it's a good rule.
I'm a SAHM, and I didn't know about this. Sometime in 2010 I applied for a furniture store credit card and got it with no problems (one of those "pay no interest for 3 years") type deals that I pay off well before the interest comes due.
I would feel flustered if I was denied a credit card. DH may bring home the paycheck, but I take care of all the finances. And while DH would have no problem being dragged out to sign up for a CC if I wanted it.... it is definitely an inconvenience.
With that said - we haven't opened up any lines of credit since 2010 and really have no need to at this time. Anyone know where this petition is on change.org? I'd sign it.
I also see Chessie's point though, and agree. But... I'd still sign that petition.
Call me crazy, but credit is based on your ability to repay. If you have no income, you can't repay. Should household income count? Sure, if it's a household credit card (ie joint). You want a credit card by yourself? Get it while you still have a job. You still get credit score points for a joint credit card.
Same reason why you should apply for an HELOC (back when you had HE) while you were employed. You'd have it available if you needed it, but had the income to support it.
The change is how creidt applications ASK for income. They used to ask for household income, and now they as for your individual income. At a place like Target where a cashier is just asking a few questions to get you the card, it is really easy for them to ask for the wrong type. No red flag is going to pop up if you give household income and not your personal income. At my bank, we have to be VERY clear that we are asking for individal income. But I'll be honest, we used to have college kids apply all the time, and because they had to disclose household income, they got to include their parents income in their app.
Post by thedutchgirl on May 16, 2012 17:58:56 GMT -5
I'm laughing over the notion of the woman in the article that her skills at home equal the value of $120,000. Aside from daycare, working moms do the same thing. And have income to pay their credit cards. I have zero problem with this aspect of the CARD Act.
I can't get any credit cards/loans because they look at just my income instead of our household income. I have student loans, so my personal debt to income ratio is very different from our HHI debt to income ratio.
My husband can get approved for anything.
I do have a credit card with my name on it because I applied with my husband.
I get that this is 2012 and a woman doesn't want to have to ask her husband or need her husband's approval for things like credit cards. The frustration is understandable, but I agree with other posters as well. What if I was racking up debt on credit cards because I wanted to spend money I/we didn't have? That's the kind of shit my step-mom got into, as well as my grandfather. My dad and grandmother knew nothing about these cards and their spouses racked up stupid debt.
Post by SirSleepsALot on May 16, 2012 18:57:58 GMT -5
The issue I have is this: If the husband (or working wife) takes out a TON of credit cards based on "individual" income but is actually supporting 4 people on this income, should that not ALSO be looked at? But it isn't. So...... why don't they allocate half of the household income to the spouse who isn't working and then base credit on that? I am a SAHM, and manage all of our finances and have a ridiculously high credit score. That said - I'm not applying for new credit cards because I DON"T HAVE A JOB and we don't use them anymore. So I don't really care. I don't need the law to make me responsible. I WOULD be pissed if we wanted a card or loan in my name b/c I get great interest rates and they said no b/c DH brings in the $. He earns the $, but it belongs to both of us.
I'm laughing over the notion of the woman in the article that her skills at home equal the value of $120,000. Aside from daycare, working moms do the same thing. And have income to pay their credit cards. I have zero problem with this aspect of the CARD Act.
that's what I was thinking - so you take care of 1 toddler and drive 1 first grader to and from school and that is worth $120,000 - early am and night don't count since working moms look after kids then.
dude, I have a 4 year early childhood degree, the most I EVER made (watching 14 toddlers (that's 13 more than her)) was $26,000. Where is my other 100,000?
Post by statlerwaldorf on May 16, 2012 19:20:22 GMT -5
I don't really care. I would be pissed if I couldn't get a card in my name from DH's account because I tend to do most of the shopping, bill pay, etc. Although I have been considering getting a Target card for the free shipping. I guess I need to have DH do it.
Post by LoveTrains on May 16, 2012 19:31:35 GMT -5
The only thing that I am concerned about with this rule is that this makes SAHP dependant on their spouse. I just don't want to go backwards to a time when women weren't able to leave abusive relationships and the like because they didn't have the economic power or capability to do so. I would hate for women to be trapped into abusive relationships because they can't get a credit card in their own name.
Post by spiderspray on May 16, 2012 19:35:37 GMT -5
You know what's funny? Before reading this, I had always assumed that this was the way it worked. If you don't have the money to re-pay the loan (credit), then you're not a very wise risk to take. Very basic stuff here.
And this is coming from a SAHM who has, for this reason, kept charging and paying off a small balance on her CC every month so that she doesn't lose it. I had this CC from when I did have an actual income (not the pat on the back kind this woman is talking about).
I really fail to see why she thinks she has a valid point here. Put this on the list of pros vs cons of being a SAHP and call it a day. Would she also like a company Christmas party this year for her and her two co-workers? #totalloon
This is why you work before becoming a SAH and establish your own credit. I don't need DH's income because I already had 3 CCs coming in the marriage and I've kept them. Easy peasy.
Yeah I can't get up in arms about this. If you can't show an income you don't get credit. If you want a card so bad you should apply with the working spouse.
What I don't get about this is that any CC application I've ever filled out asks you for your household income and doesn't verify it.
DH applied for a store card last month to get a discount. I was standing right there with him and they asked for the HHI (he had to ask me what it was, lol). No verification, no need to break it down into individuals.
If these housewives are putting down their own income as the HHI, it is no wonder they are getting denied. If they put down HOUSEHOLD income, which includes that of their spouse, then I don't understand what's going on here.
I agree that the SAH spouse should have access to credit in case of emergency or need to leave the situation. Not sure a Target card qualifies though, unless she'll need some emergency housewares?
The only thing that I am concerned about with this rule is that this makes SAHP dependant on their spouse. I just don't want to go backwards to a time when women weren't able to leave abusive relationships and the like because they didn't have the economic power or capability to do so. I would hate for women to be trapped into abusive relationships because they can't get a credit card in their own name.
SAHPs are dependent on their spouse for finances. Just a fact.
The only thing that I am concerned about with this rule is that this makes SAHP dependant on their spouse. I just don't want to go backwards to a time when women weren't able to leave abusive relationships and the like because they didn't have the economic power or capability to do so. I would hate for women to be trapped into abusive relationships because they can't get a credit card in their own name.
SAHPs are dependent on their spouse for finances. Just a fact.
Agree. It's not going backwards. It is what it is.
Post by thelongroad on May 16, 2012 23:24:23 GMT -5
It's a shame that this rule inadvertently affects SAHP's, but I find it necessary and realistic. How are credit companies to differentiate between SAHP's that rely on a spouse's income and people without an income. Furthermore, how can credit companies be confident the bill is going to get paid?
It's calculating the risk of a person without a job so I do understand the denial -- but working individuals could just as easily lose their jobs and still, obviously, have their credit cards. Risk should ultimately take into account household income and possibly other factors.
The women opened up the age-old argument that parenting is worth xx amount of dollars. What stinks about this is that people will immediately say suck ass shit like, "she changes diapers, that isn't worth $80,000." I despise this crap rhetorical argument of trying to put a price on parenting. People will say it's worth less or more than a teaching job or a corporate job, but I do think it's worth far more but for no salary -- and a salary isn't possible, won't ever be possible, nor should it possible. But it does deserve a measure of respect.
I've now been in three 'positions' -- government contractor (10 yrs), special ed teacher (10 years) and parent (5 years). The order of pay is $$$$, $$, and zero. The zero "position," obviously tongue in cheek, makes the least and has been the most serious and challenging. It's what we talk about at night and not about my website's soft launch or my husband latest acquisition. And it just IS. There is NO paycheck coming for parenting. And that's ok...but the naysayers will always jump in and tell you how easy it is to parent (and they'll throw in daycare and teaching) and undermine the value of the 'job.'
Post by imojoebunny on May 17, 2012 7:58:44 GMT -5
I think this rule is dumb. It penalizes a lot more than just SAHM's for the stupidity of others. Anyone who does not get a regular paycheck would be penalized, regardless of assets. It is as dumb as the car finance rules which rely solely on a paycheck, not on assets. Is it really a better risk decision to give a car loan to a person making $30K with no savings or someone with $300,000 in assets? I know who I would bet on.
I do not think the people who say you should have to apply with your spouse are really thinking through the reality. I know plenty of people with crap jobs whose spouses (men and women) who make most of the money. Should those people be unable to pay the roofer, the vacation, or the car repair bill because their income is 1/10th of their spouses and they can't get enough credit to cover what they are doing because they are not doing it on their income alone? Should they have to be tied to their spouse credit, even if theirs is better? Working or not working to me has little to do with your ability to pay. What does is your assets and your credit history.
This will also put college students in a bind. I can see them walking around with $1,000 in cash to pay for books or not be able to travel or buy things online because they can't have a credit card.