Under a proposed amendment by the Board of the Federal Reserve, card issuers will no longer be allowed to issue credit cards to those with no independent income, regardless of age. Spouses with no independent income will be precluded from obtaining a credit card even if they have access to the joint household income, unless they reside in a community property state. This new amendment to the Final Rule of the February 2010 changes to the Credit Card Act of 2009, is due to be implemented in 2011, and could have far reaching consequences
The Federal Reserve has considered that the changes made under the 2009 Credit Card Act have been interpreted too laxly. As the act stands it requires card issuers to consider “the ability of the consumer to make the required payments” and the Board state that this “indicates that Congress intended card issuers to base this evaluation only on the ability of the consumer applying for the account.”
Under the proposed changes “card issuers will need to request that applicants provide their own income rather than household income.” It will no longer be enough for a stay at home spouse to provide details of household income, but they must show independent income. Without it they would only be able to open a credit card in joint names or as an authorized user on the spousal account.
The new proposal is harsh on those who have given up a wage to stay at home and raise a family. Although the proposal will hit both genders it is likely to affect women more severely. It is already a fact that most divorced women find it very hard to establish credit in their own name, but this amendment would curtail their ability to obtain credit in their own name whilst married, thus they would not be able to better prepare their finances in the event of divorce.
The amendment would only be applicable to new lines of credit and to those who have no independent income who wish to increase their credit limit. It would not take existing credit away from those who have it without an independent income. The Federal Reserve closed comments to the amendment at the end of January 2011 and the change, when it comes into effect, is a regressive step which takes financial independence away from non working spouses.