CARD Act Provision Unfair to Women and Retailers?

One of the hardest things for lawmakers to do is to make everyone happy.  I’ll be the first to acknowledge that the prospect of uniform harmony in Congress is a pipe dream.  The CARD Act (Credit Card Accountability, Responsibility, and Disclosure Act of 2009) is a great example of how a law meant to protect and please consumers is likely to do the exact opposite.

The Act, among other things, restricts the issuance of credit cards to anyone who doesn’t have an income.  The goal is to keep people out of credit card debt if they can’t afford to pay it, which makes sense.  However, the metric of “income” or “the ability to pay” is taken at the individual consumer level, rather than at the household level.

What this means is anyone who is a stay-at-home mother, or father, and has no verifiable income won’t be able to qualify for any sort of credit card account.  They’ll have to either use an existing credit card, get a job, or get a co-signer.  The problem with the “individual income” requirement is that many consumers make a choice to NOT have a job so they can spend their full time raising children or otherwise managing a household.

In most cases stay-at-home mothers and fathers have a working spouse.  This means the household does, in fact, have an income and the non-working spouse has access to said income.  However, the CARD Act income requirement does NOT allow for the household income to be a consideration.  This seems to be shortsighted considering how many people are out shopping during normal business hours and engaging in commerce, presumably because they have a working spouse.

Another group this stands to hurt is the army of retailers who target women with products and services.  The next time you walk through a mall, any mall, take an informal visual survey of the distribution of stores that target women versus those that target men.  You’ll quickly realize that it’s disproportionate toward women.

A great number of these retailers has a financial services partner that issues retail store credit cards for the chain.  With the CARD Act the number of women who can take advantage of in-store credit offers will be significantly reduced.  That means no new card, no same day shopping discount, and perhaps worst of all, lost sales and revenue for the retailer.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit contributor for Mint.com, and the author of the “credit rating” definition on Wikipedia.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  He has served as a credit expert witness in more than 70 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

Categorised in: Credit Cards, Credit Report, Employment, Financial, Getting Credit, Government

This post was written by John Ulzheimer