I recently came across a news article from the US that discussed the requirement of a stay-at-home parent to get permission from the income-earning partner before opening a charge account. Quite astonishingly, even in as recent times as 2012, this is a fact.
The article delves deeper into the Federal Reserve’s stance: no income, no credit card. Simply put, a homemaker, who doesn’t bring in a regular paycheck, isn’t allowed to initiate a credit card without the consent of the earning partner.
In observing this inequality, I can personally relate to it since I’ve been a stay-at-home parent in the past. It’s arguably one of the most challenging roles! My responsibilities involved looking after kids, maintaining the household, and doing endless laundry. These duties may not come with financial remuneration but help the other partner focus on earning the family’s income – a contribution that shouldn’t be undervalued.
IN-DEPTH DETAILS
The US Money Reserve’s new rule is an additional interpretation of the CARD Act, which was originally meant to safeguard consumers. However, this ruling constrains a stay-at-home parent’s capacity to apply for credit or build a credit history.
Every credit card issuer is obligated to evaluate a consumer’s repayment ability before approving a new account or enhancing credit limits on an existing one. Consequently, a stay-at-home parent with no “personal income” cannot partake in credit-related decisions – that power resides solely with the earning partner.
Historically, credit card companies could factor in the total household income for assessing an applicant’s creditworthiness. But the update stipulates that only the individual’s personal income, not the collective household earnings, is considered.
MANAGE YOUR FINANCES
In spite of this regulation, as a stay-at-home parent, it’s essential to safeguard your financial future. Having control over your own funds and assets is crucial, even if you’re not an income earner.
Here are some strategies to build credit and savings, even without a personal income:
– Consider acquiring a joint loan with your partner. This allows you to demonstrate a reliable payment history, which can boost your credit.
– Secured credit cards can help in building credit. If you don’t possess a credit profile and can’t get a joint loan, a secured card can serve as a solution. However, be mindful of potential fees and obligatory deposits.
– Maintain a personal savings account. Even if you share a bank account with your partner, have another account in your name for emergency savings.
– Converse with your partner about finances. Ensure you’re informed about your family’s financial state through regular budget discussions, joint bill payments, and shared decision-making for substantial purchases.
– Stay on top of debt. Debt can seriously hinder any relationship, particularly if one partner accrues it and the other one is held accountable. If debt becomes an issue, seek aid promptly.
Remember, owning a credit card isn’t essential, but losing financial freedom can be detrimental.
What are your thoughts about the Federal Reserve’s rule on non-income earning stay-at-home parents not having the authority to make credit decisions for the family? Has it affected your household?
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