Why Do Stay-at-Home Parents Need Their Own Credit Cards?
I read an article last week on CNN Money with a premise that I found absolutely ridiculous. The article covered a group of stay-at-home moms (parents?) who were protesting a portion of the Card Act that requires that credit issuers evaluate a credit applicant based on his/her individual income instead of household income. The result was that some stay-at-home parents with good credit scores have been denied credit cards when they applied for them in only their names.
This situation plays in very well with our discussion of joint and separate money management as well as attitudes. I would venture that the vast majority of stay-at-home parents have joint accounts and money with their working partners and are probably largely or fully supported by their spouses, and that is my assumption going forward with these comments. My objection is that the protestors’ position is logically inconsistent. They want to apply for credit in just their own names, but they want their spouse’s income to be considered in support of their independent application. Of course I think that the SAHPs should have access to credit, but to me it’s reasonable that the credit should be joint with the wage-earning spouse.
One protester (the spokesprotestor) is quoted as saying “I think it’s demeaning — I don’t want to ask my husband’s permission for a credit card.” I have major issues with this statement – this woman is either deceiving herself or has a communication problem in her marriage. Depending on her husband for access to credit is the same thing as depending on him for money, which she must not find demeaning because she’s already doing it. Or perhaps it’s the asking she finds demeaning, which I think says a lot more about the communication in her marriage than it does about the logic of this legislation change.
Remember, the issue is not access to money but access to credit – as in, some bank’s money. A creditor needs to have a reasonable expectation that an applicant will pay it back, which is why they do the credit score and income checks. Without an income, how can they be sure that the account will be paid and whose wages can be garnished if it isn’t? A spouse can’t be held liable for an account solely in the other spouse’s name, only the person issued the credit (unless they live in a community property state, which the spokesprotester does not). In this case of non-income-generating SAHPs, there would be less recourse for the lending agency. So it makes sense to only consider the credit score and income of the applicant, not the applicant’s spouse. Again, all these problems disappear if the applicant and spouse have fully embraced to a joint property mindset and accounting structure instead of playing these transitional/joint vs. individual games.
Frankly, what surprises me most is that people without incomes were granted their own credit lines before! The creditor is choosing to lend money to someone who is, to be frank, unemployed. Someone who is unemployed but has access to money could just use a debit card, you know. They don’t have to borrow money to make purchases!
The protestors seem to want to turn this into some kind of womens’ right’s/mommy wars issue. (The spokesprotester again: “Just because I don’t get a direct paycheck for [my work], doesn’t mean it’s not worthwhile work that I’m doing.”) But the worth of parenting and housekeeping and everything else they do is not at issue, just their lack of paycheck! I think that if these parents were secure in their contributions to their families, they wouldn’t find it “demeaning” to ask their spouses to apply jointly for credit. I don’t have any problems with single-earner families – Kyle and I may very well be one at different points in our marriage. But I think it’s silly to pretend that the non-income-earning spouse is not in many ways dependent on the income-earning spouse, which is what issuing individual credit lines to non-income-earning spouses is doing.
Who do you think is more right – the Card Act or the protestors? Do you think people should be given credit if they have low or no income? Does anyone else feel like this was a practice exercise for the analytical section of the GRE?
Filed under: credit cards, income, marriage · Tags: application, CNN, credit cards, protest, SAHPs
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I tried to figure out why individual spouse cards made sense. It all comes down to death and divorce. As a SAHP, you want to at least be named on the cards so that in the event of death or divorce you have a credit history. It seems like the only reason for having your own instead of a joint card is if you are planning for a divorce or a bankruptcy. Why a bank would want to cater to people planning for this is beyond me. Maybe, just maybe, I could see a SAHP in the middle of a divorce that is about to get allimony who wants to get a card to live off of while the dust settles? In this case they can’t show income YET.
The second issue here is fact that it is a LAW we are talking about, not just a bank’s policy. It seems silly to me that banks needed to be legally forced not to do this. If mommy had a card in her name before she had the kids, are they going to go take it from her now that she doesn’t have an income? No, right?
I think you just wanted to write the word spokesprotester
Also, put “filing for credit using your partner’s income” on the list of things hetero couples (used to) take for granted that same-sex domestic partnerships never had in the first place.
(Trying to give them the benefit of the doubt) I think most of them are not actively planning for a divorce but rather want to maintain the illusion of independence from their spouses by having some separate accounts. Perhaps they are also trying to hide purchases, maliciously or not, and just expect the bill to be paid in full without their spouse inquiring as to the individual charges. Or they just got OFFENDED that women (mostly) can’t do something and decided to make a big flap about it.
I believe the law is actually to protect the consumer from the banks. Banks should be wary of lending to people without an income, but they were trying (at least passively) to trap those people in a debt cycle to make money off of them through fees and interest. I don’t think the SAHPs were the intended protectees of the new law (probably it was teenagers/dependents) but they are a logical side effect.
I am SO glad that we’re on the same page with this one. I can’t remember which blogger but somebody else wrote about this same exact article a few weeks ago. Their stance was that they agreed with the women and it was ridiculous that they couldn’t get credit in their name.
Frankly, if you and your spouse are on the same page with finances, then you should have no issue opening up the account in the other person’s name. Furthermore, I got annoyed that some people made it a gender issue. There are plenty of stay-at-home dads and they SHOULDN’T be able to get a credit card in their name either if they don’t have income.
It’s just common sense people! Oh the insanity!
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I haven’t read anyone else’s take on this – can you remember which other blogger you read? I’d be interested in reading his view. I also think they were trying to make this a gender issue when it really isn’t.
Hmm. I think it is a bit demeaning, to be honest. I don’t necessarily think it’s a gender issue – I think it’s demeaning if a man has to ask his wife, too. But at the same time, we’re responsible for our own finances so if we don’t have an income, then how are we supposed to be able to pay it off? Or get a credit card in the first place?
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I think that if they had embraced the joint mindset applying for credit jointly would not be demeaning at all. I agree with you – if they want to be responsible for their own individual cards, they have to show that they have the means to be responsible.
I guess I just think that nobody should put their financial future and well being and identity in another persons hands, even if that person is a spouse.
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I agree with Daisy. I have mixed feelings on the issue. I agree with the logic of filing jointly for an account, but something about it feels a bit demeaning and demoralizing. Besides, don’t credit card companies just want to own your soul? It seems like a silly business plan to alienate a large customer base that you used to conduct business with.
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Except that it isn’t a business plan, it is a law. I’d be willing to wager the credit card companies themselves were against it. The government is supposedly protecting SAHP from banks (or breadwinners from their spouses).
That makes a whole lot more sense.
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I understand not wanting to ask permission to get a credit card but at the same time, if you can’t pay the bill with your income, than yes, you shouldn’t be allowed to get a credit card. Now if they have some inheritance or whatever, that would be different but if they are being supported by their spouse and are saying their spouse’s income is their income, it should be a joint card. It doesn’t make sense any other way.
I guess my question to them would be if their spouse’s income went away, how would they pay the bill?
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It is a little strange that lending agencies don’t check assets, but if an applicant had an inheritance or other savings that she was being supported from, she wouldn’t need credit. This system is assuming that incomes are necessary to pay credit cards because that’s the way most people use them.
Well, job loss is a problem for any credit-holder. I think the point here is that if the bill is not being paid, it’s more difficult to go after the wage-earner if he/she is not named on the account. Or if they start a divorce the former sole wage-earner may be unwilling to pay the card even though the charges were for the household.
I love “spokesprotestor” and this is interesting. It might be somewhat demeaning to have your finances worked out just the way you want them, and then have an outside entity say that actually, no, we need the breadwinner to make this decision.
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It’s not really about who is making the decision but rather whose names are on the forms. You could make the decision together for one of you to apply individually for credit, and likewise one spouse could easily apply for joint credit using both names.
I agree with you. How is the bank supposed to trust that you will pay it back when you don’t even work?
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I don’t know…if you really do have joint finances, i.e. one person’s income gets deposited into a joint account with both people’s names on it and equal access for both people, then it seems like saying the non-earning partner can’t get a credit card alone but the earning partner can is an issue of the law not recognizing joint finances as legit. It’s like saying, “Well, yes, you are an economic unit for tax purposes and in practice at your bank(s), but we all know the money doesn’t REALLY belong to the stay at home partner.” I can see the protestors’ argument – not so much that they don’t want to talk about it with their partners, but they think it’s unfair that their marriage is a unit but they are being treated differently than their earning spouses. When you treat a couple with joint finances as individuals with separate financial profiles, it is kind of demeaning to the stay at home spouse. It would be a different issue if NEITHER partner could get credit without the other.
No strong opinion here, I can see both sides, though – how’s the bank not to know that both partners aren’t a week from divorce, or estimate how honest and healthy communication is within the relationship? Is it even a bank’s place to recognize marriage as the formation of a financial partnership? Maybe not.
There are practical reasons for having separate credit cards – e.g. work-related travel that gets reimbursed later, which you might want to keep separate from family finances. Actually, that’s the only one I can think of. But I can imagine that other people might think of others.
Thanks for your comment. I guess I just go back to: what is the bank’s recourse (or the non-wage-earning spouse’s recourse) if the wage-earner decides not to pay on that individual credit card? That’s the thing about credit – you’re asking to use someone else’s money, at least for a short time, and it can get out of control. I guess I would prefer that neither spouse could get credit without the other, particularly in community property states, because then there could be no secret running-up of charges on either side, but that would force people who don’t want to be joint into that system. I really haven’t been able to think of a non-malicious reason (like Richard was talking about) that a non-working spouse would need an individual credit line. And what’s the difference in having a joint credit account, but only issuing the card to the non-working spouse so that he is the only one using it? That gets around any tracking issues that the couple might want the individual account for.
Yeah, I can’t really think of any good reason you would need separate credit, since wouldn’t joint credit cards still help your credit score if that’s the issue? My example of travel expenses that are reimbursed (the major reason my husband and I are keeping separate credit cards, even though we’re moving to joint + personal allowances this summer) is something that could be managed through joint accounts too. And you can have someone as a co-signer who doesn’t actually use the account.
Maybe people are upset for symbolic reasons, feeling devalued in the eyes of society, rather than practical ones? That’s what it looks like it comes down to, I guess.
There’s a lot of SAHM and SAHD pushback for exceptions to rules like this. On the one hand, I understand that SAH parents don’t want to be “penalized” because “their half” of the marriage doesn’t have a number assigned. On the other hand, I understand that companies don’t want to extend credit to people who do not have income assigned to them – if they get divorced they could have no money at all. I’m DEFINITELY not a fan of the credit card companies but can’t say this is particularly unreasonable.
Also, I’m a big proponent of consequences. Being a SAH parent is an honorable choice (my wife is one…). But it’s a choice. And it has consequences – credit and otherwise. There are gives and takes. This is one of those consequences – people won’t lend you money in your name only.
I’d give up my credit cards in a heartbeat to stay home with my kids.
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The legislation is protecting the SAHP as well – in case of divorce they could get stuck in a debt trap! Better to have the wage-earning spouse accountable for the spending as well. I agree with you that our choices have consequences. Giving up an income to become a SAHP means giving up financial autonomy and independence. I don’t think that’s a bad thing at all!
I’m currently a stay-at-home-mama and there is absolutely no part of me that thinks I deserve my own credit card separate from my husband…who makes most of the money (I have some side hustles naturally). Michelle is right…there’s no way for a bank to trust someone without a paying job! I don’t even get it. I have credit cards. They have my name on them even! Am I supposed to be upset that my husband has access to them as well? That’s just so weird. This might actually be more of an issue with marriages today, not creditors. I have a great relationship with my husband and we discuss everything. He always treats me like an equal and we discuss all financial decisions together. That might be why these SAHPs are getting peeved…they just don’t have awesome partners perhaps.
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Thanks for your comment! I’m glad to hear from a SAHP. I agree with you that a couple that has fully embraced a joint mindset and has good communication should not have a problem with this legislation as everything would be in both spouses’ names.
Well said! I completely agree with you, I think this whole protesting is just a knee jerk, emotional reaction (not emotional because they are mostly women, emotional because they feel insulted) that doesn’t have much basis in logic. Hopefully it’ll blow over.
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Thanks – you summed it up well, too. The protesters were just upset they couldn’t do something they used to do and didn’t think about how the law is actually protecting them and makes sense for the banks, too.
I agree with this. The article says the woman was denied at Target. I’m guessing she had a larger purchase than usual and figured that “if ever I signed up for the cc to get a discount, now’s the time!” and then got denied and was humiliated by the experience. I doubt her assessment of the situation went any deeper than that! (Although she also claims to be a former CEO – so one would hope she *did* give it more thorough consideration….)
I missed that she had been denied at Target. I find your proposed scenario totally plausible. I was a bit put off by the claiming of high-powered careers, too – like, is this how you thought through decisions when you were in charge, too?
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You make some very good points here.
Now, I do like the idea of two people in marriage being able to work as a true team, a partnership where money is shared and people aren’t keeping score. That being said, I think there is some gap in knowledge with the protesters, if I understand this correctly.
If one is applying for credit individually, but not working and fully dependent on a spouse for support, shouldn’t the lender be concerned about the likelihood or repayment and ability to make any payments at all? Do these people want to have their cake and eat it too, so to speak?
I think Nick’s comments above are quite realistic. There are tradeoffs to decisions, and we can’t have it all and complain things are unfair otherwise. Being a family with one income can have some truly wonderful rewards, but there are risks as well. Can’t expect to get all the benefits without the risks, which is something to keep in mind in life in general.
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Goodness, in all the talk about the worth of SAHPs, this isn’t something I’ve ever considered. I’m not American, but what does that mean for current SAHPs who previously had their own CCs under their own names granted when they were working?
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I don’t know for sure, but my guess is that their existing credit lines will be unaffected (those cards could have been granted either with or without an income, by some creditors anyway, until 2009).
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What can you expect? If you don’t have credit you will not get a card. Whats the big deal. You can’t have everything.
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Great post! You’ve had me thinking about this for a while now. When I originally heard that SAHPs would need their spouses permission I thought that was silly but I now think I was wrong. The arguments against that law are based on the idea that having a credit card is a right instead of a privileged. Everyone is still capable (legally – can still be at the banks digression I suppose) of opening their own bank account. No one NEEDS credit to operate in our society, a debit card can work just as well. If we stop operating under the assumption that credit (or going into debt) is the only way of paying for our lives, then the arguments that SAHPs need their own credit (even in the case of divorce or death) lose a lot of their impact.
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I totally agree. The access to credit has been conflated with the access to money because our culture has totally lost the idea that things can be paid for through saving in advance.
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