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On every credit card application, there comes a section where you have to fill out your financial information
Makes sense, right? I mean this is a company that is going to just GIVE you money and HOPE that you’re going to pay it back. So I can understand why they would want a little bit of information about you, and your ability to pay it back.
For the most part, if you have a “simple” financial situation (a regular salaried job), this was no big deal – you just put your annual income in and that was that.
Starting in 2010 however, this got a bit tricky for stay at home moms and other people with more complicated situations. As part of the CARD act of 2009, banks were required to evaluate people based on their individual ability to re-pay (among many other reforms)
One unintended consequence of this was that all of a sudden, stay-at-home moms and others with more “complicated” situations found themselves frozen out of the credit card market. Applications all of a sudden specified INDIVIDUAL income, and so it was unclear whether stay-at-home moms had to put in $0.
There were some that went ahead and put in household income anyways, and if asked about it, just stated the truth. There were probably some people that may even been a bit “dodgy” with the situation, though I wouldn’t recommend that. I wasn’t particularly active in this back then, so I’m not sure what banks would do with SAHMs that listed $0 income, but thankfully this has all now been resolved.
Operating at the “speed of government” 😀 , an amendment to the CARD act was finally put into place in April of 2013. Specifically, the amendment “allows 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.”
So now there is no problem with putting down the total household income. In fact, Carolyn did a new churn today for a few new cards, which I will detail in an upcoming post.
What do you think? Did they finally get it right? Does it make sense to you to consider only individual income, or should household income be allowed?