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From Banking and Finance Law Daily, April 30, 2013

CARD Act Rule Provides Access to Credit for Stay-at-Home Spouses, Partners

By Katalina M. Bianco, J.D.

The Consumer Financial Protection Bureau has amended the Credit Card Accountability Responsibility and Disclosure Act (Regulation Z—Truth in Lending (12 CFR 1026.51)) to provide access to credit cards for spouses and partners that do not work outside the home.

“Stay-at-home spouses or partners who have access to resources that allow them to make payments on a credit card can now get their own cards,” said CFPB Director Richard Cordray in the bureau’s announcement. “Today’s final rule is an example of the Bureau’s commitment to working with consumers and financial institutions in order to ensure responsible access to credit for American families.”

The CARD Act requires that card issuers evaluate a consumer’s ability to pay before opening a new credit card account or increasing a credit limit. Under current CARD Act regulations, a card issuer generally may consider only the individual card applicant’s independent income or assets.

Amendments. The revisions allow credit card issuers to consider income that a stay-at-home applicant, who is 21 or older, shares with a spouse or partner when evaluating the applicant for a new account or increased credit limit. For credit card applicants who are 21 or older, card issuers may consider third-party income if the applicant has a “reasonable expectation of access” to it.

Under the rule, “reasonable expectation of access” for a spouse can be determined by any of three methods:

  1. a person’s salary is deposited into a joint account;
  2. there are regular funds transfers to the non-working spouse’s account; or
  3. the applicant receives the benefits of the income.

The rule becomes effective upon publication in the Federal Register, and compliance is mandatory six months thereafter.

Reaction to final rule. Rep. Shelley Moore Capito (R-WV), chair of the Subcommittee on Financial Institutions and Consumer Credit, Rep. Carolyn Maloney (D-NY), principal author of the Credit CARD Act and Ranking Member of the Subcommittee, and Rep. Louise M. Slaughter (D-NY), Ranking Member of the House Committee on Rules, jointly praised the CFPB for adopting the rule.

“This common-sense clarification of the rules for stay-at-home spouses and partners by the CFPB is recognition of how modern families work,” Maloney said. “It’s what we always intended when we wrote the CARD Act, and now card issuers have clear rules of the road going forward.”

“Families who choose to have one spouse stay at home should not be penalized by one-size-fits all regulations,” said Capito. The amendments to the CARD Act “will provide clarity” to ensure that qualified borrowers are not denied access to credit.

“This rule upholds Congressional intent to protect college students from falling into crippling debt, while maintaining the ability of stay-at-home spouses to build credit,” Slaughter said. She also noted that, as an original author of the Violence Against Women Act, she is aware that lack of access to credit can keep one partner trapped in an abusive relationship.

RegulatoryActivity: CFPB ConsumerCredit CreditDebitGiftCards

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