The article sheds light on the Federal Reserve’s decision: No paycheck, no credit card. The bottom line, a homemaker not earning a “paycheck” is not able to open a credit card without their partner’s consent.
The inequality of this decision is very apparent to me as I have been a stay at home parent in the past and the reality is, it’s the hardest job I’ve ever had. While staying at home with the kids, taking care of the house, and doing countless loads of laundry does not pay well, it affords the other partner the ability to earn an income for the family, and thus should be worth something.
The US Money Reserve issued the new rule as a clarification to the CARD Act put in place to protect consumers. While the ruling protects consumers it also limits a stay at home parents ability to apply for credit or build a credit profile.
The law requires credit card issuers to carefully consider a consumer’s repayment capability before opening a new account or increasing credit limits on an existing account. As a result a stay at home parent with no “income” is unable to participate in credit related decisions, only the breadwinner can.
Previously credit card companies could consider household income when assessing the creditworthiness of an individual who applies for his or her own card. Under this rule, only an individual’s own salary, rather than combined household income, may be considered.
Stay in Control of Your Finances
Despite this rule, as a stay at home parent you have a responsibility to your financial future. It is still important to have control of your own money and any assets you may have even if you are not working outside of the home.
Here are a few ways to build credit and savings, even without an income:
- Consider a joint loan with your partner. A joint loan enables you to show a good payment history that can reflect positively on your credit.
- Secured credit cards build credit. Perhaps you don’t have a credit profile and can’t open a joint loan, a secured card can help you to build credit. Be aware most come with associated fees, and a required deposit, so use with caution.
- Have your own savings account. Even if you have a joint bank account with your partner, have another account solely in your name. Build up your savings there as a personal rainy day fund.
- Talk to your partner. Never be left in the dark about your family’s financial situation. Have monthly budget meetings, pay bills together, and discuss major purchases.
- Stay ahead of debt. Debt can wreak havoc on any relationship especially if one party has caused it and the other is held accountable. If you are struggling with debt be sure to seek debt help before it is too late.
Understand that having a credit card is not a necessity but losing your freedom to decide can be devastating.
How do you feel about the Federal Reserve’s ruling on stay at home parent’s with no reported income not being able to make credit decisions for the family? Has your household been affected?