The Credit Card Accountability Responsibility and Disclosure Act, signed into law by President Barack Obama in May 2009, was intended “to put strong protections in place for consumers. Unfair rate increases, late-fee traps and bombarding credit card offers on college campuses were key targets of the legislation.” However, the Federal Reserve Board recently decided that the Act mandates that credit card companies only take individual income into account when deciding when to accept someone’s request for a credit card. This decision was meant to keep college students from going into credit card debt they could not afford to pay off but it also has the consequence of disenfranchising stay-at-home parents, 88% of whom are women.
Anisha Sekar, the chief content manager and credit card analyst for NerdWallet.com said that this would mean that a stay-at-home parent would have to get his or her spouse’s co-signature before attaining a credit card. This is despite the fact that a stay-at-home parent is “likely to make the household’s financial decisions, from paying for groceries to saving for college to dealing with medical bills.” It also ignores that, as Sekar says, “a stay-at-home mom works just as hard as (or harder than) her spouse-she just doesn’t file her income with the IRS.”
In response to outcry from women’s rights advocates, the Federal Reserve stated that “the individual-income provision may be ‘inconvenient or impractical,’ but that such restrictions are necessary to prevent reckless lending and borrowing.” The “necessity” of not allowing stay-at-home parents an equal footing in financial decisions in the household can contribute to the negative psychological effect of “relying completely on a spouse for such an essential part of adult finances.” It “also renders stay-at-home parents financially vulnerable in the case of divorce. If a stay-at-home mom’s spouse is irresponsible, her credit score will fall-and she can’t repair it without her own line of credit.”
In the worst case scenario, the Federal Reserve’s decision will play a role in financial abuse. Financial abuse is a factor in 98% of abusive relationships. Rene Renick of the National Network to End Domestic Violence said “I can’t tell you the number of women who’ve said, ‘I stayed in the relationship longer than I wanted, or came back, [because] I was afraid I wouldn’t be able to feed my kids,'” says Renick. “[The Fed's regulations] will limit a woman’s ability to have access to assets on her own. Batterers will more than likely use this to … keep her entrapped in the relationship.” U.S. Representatives Carolyn B. Maloney and Louise Slaughter said that not only may not having a credit card contribute to one’s abuse, but the ability to attain one independently of one’s spouse could be incredibly important when trying to escape an abusive relationship. They wrote, “Women trapped in abusive marriages may be unable to work due to a controlling spouse…the availability of an independent credit card may represent her best chance at establishing independence and a path out of a dangerous relationship.”
You can read more about the unfortunate consequences of the Federal Reserve’s decision to ban stay-at-home parents from attaining their own credit card here.
Photo from here.