While the CARD Act was aimed at offering consumer protection from their card issuers, it seems to have had the reverse effect. Instead of protecting customers the CARD Act will be having a negative impact on some customers like the stay-at-home moms as it would be curtailing them from obtaining credit cards on their own without the co-signature from their husbands. This impact would be felt even by the stay-at-home husbands, but on a small scale.
As per the CARD Act, the credit card issuer has to verify the income or the repaying capacity before letting an individual open a new account. In instances where the income is absent, a co-signatory would be required. This was actually meant for students who were under 21 years of age, and prevent them from opening a new account, or getting into credit card debt.
Hypothetically, this makes sense – if those with no income are refused a credit card, they will not get into further debt as they cannot pay. However, the problem here is that there are many people, who do not wish to work and hence have no income, but still manage to engage in commerce for the sake of their families or households.
The Wall Street Journal was the first to point out the CARD Act’s requirement where the creditors are to consider only the applicant’s individual income while processing credit card applications instead of the household income. Even if the applicant has access to funds through an employed spouse, it is essential to show individual income, and zero individual income would mean no credit card approval. The worst part is that the co-signer will also have to apply for the card. This means that there is a dual liability, and any negative reporting on the credit report due to non-payment would reflect on both credit reports.
This is not really the first time where women have been treated unfairly, or have been on the wrong side of the law, or while policy-making decisions were made.
This provision in the Act is not going to hurt just the women, and men who have no income proof, but it would hurt the retailers too. As this means that those who wish to make a huge purchase should essentially have a job, and those who want an increase in credit limit to make a larger purchase must also have a job, irrespective of whether they can afford that purchase or not.