Before the development of the CFPB, the Obama administration passed the CARD Act of 2009. This established a new foothold for improving credit in the United States that is helping stay-at-home spouses regain better credit standing.
The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (aka the Credit CARD Act) has been, so far, one of the greatest shining achievements of the Obama administration. This measure created new standards for consumer protection in the consumer financial market, new standards that will save credit card holders millions of dollars every year.
Benefits of the CARD Act include (but are not limited to):
- Increasing penalties on lenders who violate rules and bylaws
- Requiring credit card companies to compose their documents in plain language so that consumers have an easier time understanding their restrictions, benefits, and regulations
- Restrictions on subprime lending fees (which have gotten out of hand)
- Banning retroactive interest rate increases
- Stopped fee traps like near-impossible repayment periods that would always result in fee assessment and technicalities that would expire due dates in the middle of the day (instead of the close of the business day)
While the CARD Act has been helpful for people with active credit cards and a full-time job to support the payments, the new restrictions have made it harder for stay-at-home parents to piggyback the household income and get a credit card of their own. These new measures, basically, restrict income to a single earner, making joint assets and accounts less favorable for the purposes of credit.
There are approximately 5 million stay-at-home parents across the U.S., both women and men. With measures as they are, this population of perfectly responsible people will have a hard time getting approved for a credit card.
New laws, under the CARD Act, restrict “income” to what an individual makes and not the overall income of the household. This helped to ensure that, for example, college students (who don’t have much income) could not be approved for credit cards that they cannot afford to repay.
While the benefit makes perfect sense in the prevention of irresponsible lending to risky applicants, it also brings attention to the fact that the stay-at-home spouses of busy wage-earners-spouses who contribute a familial value equal to, at the very least, that of their out-of-home earner—neither qualify for credit.
The CARD Act discounts these spouses because they do not have an “income” as reported and tracked by Internal Revenue Service.
New measures, though, are about to change all that. Salary.com performed a recent examination of these facts, calculating an estimated value of the work provided by stay-at-home spouses. They found that these spouses work an average of 95 hours per week, which could total upwards of $113,000 a year (in hourly value).
This number might seem high to some people and to them, the $60,000 number that Insurance.com calculated might seem more reasonable. The significant variance, of course, could account for any number of variables that depend on the comprehensiveness of the services provided.
Consider, for example, that a parent might not only provide “child care” but they might also cook and clean. This is the standard “homemaker” job description. These days, however, a stay-at-home spouse might also contribute a wide variety of other tasks or, at the very least, there is a larger description of jobs that fall under “homemaker” and thus stay-at-home spouses have more ways to define their work than ever before.
This could include anything from day care teacher to janitor to psychologist, according to the kinds of services provided.
Richard Cordray, Director of the Consumer Financial Protection Bureau, acknowledges “We have determined that it is a significant problem [affecting] tens of thousands” of Americans. They are currently at work on a fix, but nothing is yet set in stone.
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