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Consumer agency proposes changes to CARD Act rules

In 2009, the Credit Card Accountability Responsibility and Disclosure Act came into effect. The CARD Act was intended for the most part to protect students from running up high credit card balances. Obviously, student debt remains a huge issue in this country. Excessive credit card debt is also a problem for many Ohio residents. However, the CARD Act has had some side effects that can be harsh on stay at home moms or dads whose spouse has a steady income.

The law requires credit card companies to review an applicant's potential ability to repay the credit card debt before approving a credit application. In cases where a stay at home spouse intends to use the household budget to pay the debt, credit card companies generally do not approve the application. The rules require the credit card issuer to evaluate the application based only upon the applicant's income.

Some people seek to create a credit history through the use of at least one credit card. A person with no credit history essentially has no access to credit down the line, even if the person's life situation changes. When a person is denied credit from the get-go, although the person has access to money to pay the debt, not only can the person not have access to the convenience of credit cards, but may be harmed by having no credit history. Let's face it-we live in a world that is highly dependent upon plastic transactions.

The Consumer Financial Protection Bureau is looking into having the rules change to benefit stay at home spouses and unmarried partners who have shared income. The potential rule change would apply to people who are at least 21-year-old, which may leave some stay at home spouses without access to credit.

Richard Cordray says that the rule change is "common sense," according to the New York Times. The rule change would allow nonworking spouses or partners who have access to a working spouse or partner's income" to apply for credit based upon the shared income.

The agency has opened the proposal to public and industry comments. The proposal is open for comment for the next two months.

Source: New York Times, "Proposed Credit Card Rules Aid Spouses and Partners," Ann Carrns, Oct. 18, 2012

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