Stay-At-Home Parents Could Face Credit Denial Under Banking Law

By Eric Scheiner | April 16, 2012 | 12:16 PM EDT

( - A stay-at-home parent without a significant outside income could find it difficult to open their own credit card account under a measure signed into law by President Obama.

“We’re here today because of a bill that will make a big difference,” President Barack Obama said in May of 2009 when he signed the Credit Card Accountability Responsibility and Disclosure (CARD) Act.

Haraz N. Ghanbari/The Associated Press President Barack Obama greets lawmakers in the Rose Garden of the White House, prior to signing the Credit Card Accountability, Responsibility and Disclosure Act.

One of the differences created by the CARD Act is a Federal Reserve rule regarding “ability to pay”. A credit card issuer must verify income before allowing someone to open a new account.

The rule took effect in October 2011, prohibiting the consideration of household income if only one person is applying for a credit card account. It says that a card issuer must consider a consumer's independent ability to make the required payments, “regardless of the consumer's age.”

A stay-at-home parent must prove that they alone can make the payments with only their income sources. If they cannot, they would have to have their working partner co-sign in order to obtain the credit, a concern of several lawmakers.

“Stay-at-home spouses often control the finances of the home. And they should be able to apply independently for credit without having to have the other spouse co sign the application. We need to make sure that the rule imposed by the Federal Reserve does not take us back to the days when women had to have their husbands co-sign on accounts with them,” Rep. Carolyn Maloney (D-N.Y.) wrote to in an e-mail on the subject.

A bipartisan group of representatives including Financial Services Committee Chair Rep. Spencer Bachus (R-Ala.), Rep. Carolyn Maloney (D-N.Y.) and 23 others has sent a letter to the Consumer Financial Protection Bureau (CFBP) to study and possibly change this rule, expressing concern that it “will disadvantage stay-at-home spouses”.

In December of 2011 legislators wrote to the CFPB:

“The Federal Reserve’s final rules create a uniform standard requiring all consumers to demonstrate 'an independent ability to repay.' We believe that these rules contradict the Congressional intent of the Credit CARD Act since the Act created two distinct standards, one for younger consumers and one for all others. We also are concerned that these rules will disadvantage stay-at-home spouses who may not have an independent source of income but whom may have ample 'household income' to secure lines of credit.”

The letter asks for a six month study on the legislation to see if it’s harming stay at home spouses, and to change the rule if necessary.

Rep. Carolyn Maloney (D-N.Y.) (AP Photo) contacted the CFBP to see if they have moved forward on this study and they declined to comment for this story.

Rep. Maloney says her office has been in contact with the CFPB on the issue, “I along with my colleague Louise Slaughter (D-N.Y.) have been in contact with the CFPB about this issue on multiple occasions and they assure me that they are collecting the data they need to determine whether the Fed’s rule is having a negative impact on stay at home spouses. I have no doubt that they will take action if needed as soon as it is clear what that impact has been.”

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Eric Scheiner
Eric Scheiner
Eric is the Senior Video Producer for