New Fed Rule Limits Credit Cards for SAH Parents!

[MrsPete]

My ex demolished our credit. In our divorce I made sure there was a stipulation that he take legal responsibility for all marital debts. I never got collection calls or letters. I did need to show my divorce papers 2 years later when I bought my first car, since my credit report was trashed. I also needed it 2 years after that when I bought my first home.

That makes perfect sense. I guess everyone doesn't realize you can make these stipulations, and then you aren't stuck paying back an ex-spouse's foolish purchases. But then, I'm often surprised at just how uninformed so many people are on financial matters.

I think the point many people here aren't getting is that married couples where one spouse stays home usually view themselves as a unit financially. I may not bring in income but I work we each play our part in the family. There is not "his" and "mine" there is only ou

No, that's perfectly clear -- BUT you're talking about how you see yourselves within the family unit . . . but what does that have to do with the world beyond your four walls? From a legal standpoint, looking at your family from the outside, he has income and you don't.

I can't say that my husband and I are a whole lot different: He earns twice my salary, and he has MUCH more in his investment accounts. I, on the other hand, own the house, and I will have a lifetime pension after I work another 10 years. We tend to look at these assets together as OURS, and we consider our financial futures to be intertwined. We are both beneficiaries of one another's accounts, and we aren't going to divorce. BUT from a legal point of view, he could take away the bulk of our accessible money, and I could kick him out of the house. Legally, what's his is his and what's mine is mine. We don't think about it that way, but it's true.

I was one of the college students with 3 credit cards...funnily enough I was perfect with them until I was out of grad school (I'd gotten those cards in my freshman year of college) and trying to create my practice... I'd never needed my mom to help with the cards until then.

Speaking only for myself, my standard of living WENT DOWN -- WAY DOWN -- in the year or two after college graduation -- rent cost more off campus, I didn't have financial aid any more, I didn't have a professional wardrobe, and I had to buy a car. Money was TIGHTER than it was in college. Thank goodness I didn't have student loans to pay back; I don't know how I would've managed.

Except that the regulation is not coming from some corporate entity. It is coming from the Federal Reserve. The corporate entities have been fine with offering credit cards to individuals with no individual source of income.

That makes perfect sense, if you realize the bigger picture behind it all: Credit card companies have been giving out cards to anyone regardless of the individual's credit-worthiness. When those high-risk customers don't pay, the company gets a tax write-off courtesy of you and me, the American taxpayers. The credit card companies have NOTHING TO LOSE by giving a credit card to a person with no income.

On the other hand, the federal government seems to be realizing that they can't keep opening their pocketbook to everyone for every reason. So they're cracking down on who the credit card companies can choose.

Personally, I think a better choice would've been for the government to say they're going to STOP bailing out the credit card companies -- which would actually have the same result: They'd stop giving cards to people who don't have incomes.

But for the Gov't to sit there and actually tell the banks what they should do to alleviate credit risks is just beyond words for me. They don't know their heads from their butts and spending totally out of control and on things that most of us would find crazy, and yet they feel that they can tell others how to manage.

Read the above response.

 

[Marionnette]

On the other hand, the federal government seems to be realizing that they can't keep opening their pocketbook to everyone for every reason. So they're cracking down on who the credit card companies can choose.

Personally, I think a better choice would've been for the government to say they're going to STOP bailing out the credit card companies -- which would actually have the same result: They'd stop giving cards to people who don't have incomes. Read the above response.

But the Federal Reserve is not "the government". The head of the Fed and its Board of Governors are appointed by the President but it is not a branch of the government nor are its members a part of the President's cabinet. It is also run by the representatives from both large corporate banks and smaller regional banks. It operates independently from the federal government and its regulations do not need to be approved by Congress or signed into law by the President.

Kind of makes you go when you think about it. The maniacs who brought us easily accessible credit for all are the exact ones in charge of the insane asylum.

 

[eliza61]

And the Gov't dangled this big fat shiny play thing in front of the public, and basically encouraged the banks to over extend. Yep, we did over spend, well some, ok lots of people did. But it was encouraged, it was practically forced.

The gov't has its own little nasty hand in all of this mess, you also need to blame them for some of it. I don't think the John Q Public crated the employment fiasco, and they sure didn't create the housing fiasco. Let's face it, we all screwed up, but the Govt screwed up just as bad if not worse than the public did.

I think at this point most of the people I know think that the Gov't can't handle anything, which is why they need to get the heck out of everyone's lives and fix their own problems first. As for the rest of my opinions, I can't get into those here, it isn't allowed.

But the problem is, we won't fix our own problems. Like I said we've already proven that. Deregulation made credit easy and attractive. If so many Americans are so great at fixing their own problems how the heck did they get into trouble in the first place? If so many of us are such gurus and self controlled then the easy credit would not have meant any thing. If so many people are so great at living within their means, what's the complaint?

See we talk a great game, oh yeah let me handle my own retirement, let me handle my own credit and then we scream "Oh the banks should not have let me take out the money"

Yeah, we've done such a fantastic job of restraint and financial wizardry.

I remember a couple of weeks ago, some one posted about a young lady with 200K of college debt because she HAD to go to some fancy college. of course even after her every one and their brother told her she couldn't afford the cost of the college, she went right ahead and took out a boat load of loans that she now cannot pay. which means the next generation of kids who possible need help, won't be able to get it or the cost will trickle down. So what the government forced her to take out these hefty loans? Where is the so called "personal responsibility" that you claim is going to happen?

How many times do we, us disser read post that go "I can't really afford Disney but I'm going to go anyway because hey, my kids are only young once"

So you think the goven't can handle their affairs, I know that the general public can't or won't. I can't wait until all the folks my age who have yet to save a bloody nickel. that's going to be fun.

Know I am in no way saying that haven't had a lot of intrusions but please spare me the "we are being held down" by the govntment from doing the right thing. We are being held down because some where along the line we were told we deserve every thing now, regardless to how we get it.

 

[MoonFaerie]

Buying and making payments on a car or a house, having utilities in your name, having insurance and taxes in your name, maintaining a checking and savings account. None of those things are affected by this new law. My first-ever credit was established in college; it was utilities on an on-campus apartment. With that and evidence that I had a job, I had no problem getting a first-time off-campus apartment without a co-signer. And after that I had no problem buying a car and a house.

DH and I didn't get a credit card 'til we were over 30, and now we use them only because they're convenient and give us rewards -- we survived without them. Prior to that we had no difficulty buying a house and several cars.

Credit cards are not the be-all, end-all of all things financial. I agree. I'm not saying it's fair, but over-the-top melodrama usually strips away any sympathy I might've had for any cause.

None of those show on our credit reports. Nor do our cell phones, that we most certainly had to have a credit check to get. They're in dh's name because as a SAHM, despite having had my checking acct since 97, utilities and insurance in my name, and our previous cell phones in my name, I don't have any credit. When we replaced my van a few months ago, instead of paying cash for my "new" car, we financed a couple grand and co-signed.

We're looking at me becoming the primary income earner in 2-3 years and dh going back to school. DH's good credit won't do us much good if he's unemployed, and my job won't necessarily make up for a lack of credit.

 

[jm-mom]

My thought is that your daughter should not have a credit card until she has a solid job to pay for it. No one should. She has a right to build credit and she will by getting a job then a credit card. In the mean time, if you think she needs a card for an emergency or something, she should have one of your cards. Building solid, excellent credit is hard work and takes time and should be done so responsibly. Yes, single people just starting out or fresh out of divorce have it a litle harder under this new law. However, it really only takes a few months of work history to get a credit card. I don't agree that the govermnent should, in effrect, be telling how to manage our finances, but I do know many, many families not doing a v ery good job of it on their own. If you look at the statistics, how much credit card debt people carry on top of mortgages they can't really afford, you can see why someone has to do something. I get so irked when I see people living in big, fancy houses, driving nice cars and hear them say they are maxed out on credit cards. It's a no-brainer, you are living beyond your means. A single unemployed person or sahm has no income of their own so technically owing even one dollar on a credit card is beyond their means. It's all very simple -- you need assets to get credit, and you shouldn't use credit unless you can pay it all off at the end of the month. We have been dead broke, had bill collector's calling, etc., and it's a life I would never go back to. Now we have two major credit cards with very high limits that are paid off in full every month and life is so much easier. it's very hard work to establish good credit, I'm here to say it is possible.

 

[dfchelbay]

Well sorry but as my DH says, his income IS my income.

But, if the card is in your name only and goes into default, the credit card company cannot go after your husband's income to repay the debt. I do not agree with penalizing SAHP, but I was under the impression that this type of practice was already going on anyway I wouldn't have thought a credit card company would give a credit card to an individual without an income.

 

[Allison]

To me, it makes perfect sense. You need income or assets in order to have credit extended to you. It makes no sense to extend credit to someone who is dependent on the good will of another individual in order to make payments.

It makes perfect sense to me too.

 

[Colleen27]

Don't blow it out of proportion: It's limiting ONE ASPECT: Credit cards. Credit is built in many other ways.

How so? Most of the alternatives people talk about (like utilities) only report negatives. They don't report at all when obligations are met consistently. I paid off my student loan and the one and only car I ever financed 10+ years ago, and in that time I haven't had a single new entry - positive or negative - other than credit checks noted on my report. All the utilities, insurance, etc. are in my name simply because it is easier in this era where companies can't/won't talk to anyone other than the account-holder, not even a spouse, but my credit report is essentially blank.

This new measure makes becoming a SAHP much riskier, personally/financially, because it ends one of the most important avenues a non-working spouse had to protect him/herself should the marriage end.

 

[JoiseyMom]

SAHP do have income and assets, they share those of their spouses. IF they don't, then I feel sorry for them in that marriage. SAHP are not indentured servants or children! If a SAHP would charge their spouse for the work they do, most working spouses wouldn't be able to afford them!!

Let's get real, we have come along way from Lucy and Ricky and him giving her an allowance . What a way to have lived.

When a parent stays home, yes they make sacrifices. Giving up their financial independence shouldn't be one of them. Consider a marriage a corporate merger...the SAHP is a major stock holder and gets to vote etc...and collects dividends and owns 50 percent of the corporation. That gives them assets and income!! Not honey I need your credit card so I can buy a dress! Geez....

Credit Card companies LOVE that people don't/can't pay off their credit cards! They love the insane interest and fees they collect. Even for what they charge off for those that don't pay for whatever reason, since the other monies balance out their losses, plus their losses are a tax write off.

CC companies consider me a dead beat! They don't want me to do what I do every month! I charge the majority of my purchases (I very rarely carry cash), and I pay my bills in full every month.

And yes, the CC companies created this mess by giving CC like candy at Halloween. Do they have the right to decide who gets credit sure they do. But not to consider the income of the household is stupid. And you are always going to have those that can't handle it adn those that try to beat the system no matter what the laws say.

 

[fortwildernessishome]

None of those show on our credit reports. Nor do our cell phones, that we most certainly had to have a credit check to get. They're in dh's name because as a SAHM, despite having had my checking acct since 97, utilities and insurance in my name, and our previous cell phones in my name, I don't have any credit. When we replaced my van a few months ago, instead of paying cash for my "new" car, we financed a couple grand and co-signed.

We're looking at me becoming the primary income earner in 2-3 years and dh going back to school. DH's good credit won't do us much good if he's unemployed, and my job won't necessarily make up for a lack of credit.

Interesting that you write how none of the things like utilities and checking/savings accounts and such show up on credit reports. Last night, on this thread, I had asked the question of "how do you builld credit without a credit card?", because I too always felt like if I was taking out a loan and my credit report was checked out that they were looking at my credit card record/history. Everyone has their own opinions, but I truly feel like it would be hard to build a good credit rating without a single credit card. However, I already KNOW that many people on here have built themselves amazing credit reports with no credit card history........interesting!

 

[mhsjax]

But the problem is, we won't fix our own problems. Like I said we've already proven that. Deregulation made credit easy and attractive. If so many Americans are so great at fixing their own problems how the heck did they get into trouble in the first place? If so many of us are such gurus and self controlled then the easy credit would not have meant any thing. If so many people are so great at living within their means, what's the complaint?

See we talk a great game, oh yeah let me handle my own retirement, let me handle my own credit and then we scream "Oh the banks should not have let me take out the money"

Yeah, we've done such a fantastic job of restraint and financial wizardry.

I remember a couple of weeks ago, some one posted about a young lady with 200K of college debt because she HAD to go to some fancy college. of course even after her every one and their brother told her she couldn't afford the cost of the college, she went right ahead and took out a boat load of loans that she now cannot pay. which means the next generation of kids who possible need help, won't be able to get it or the cost will trickle down. So what the government forced her to take out these hefty loans? Where is the so called "personal responsibility" that you claim is going to happen?

How many times do we, us disser read post that go "I can't really afford Disney but I'm going to go anyway because hey, my kids are only young once"

So you think the goven't can handle their affairs, I know that the general public can't or won't. I can't wait until all the folks my age who have yet to save a bloody nickel. that's going to be fun.

Know I am in no way saying that haven't had a lot of intrusions but please spare me the "we are being held down" by the govntment from doing the right thing. We are being held down because some where along the line we were told we deserve every thing now, regardless to how we get it.

And I completely agree with you. Maybe the best idea is to stop extending credit completely. And on the whole mess thing, hum lets see loss of income may be one idea. I know families that have been wiped out and they had a good amount of savings, but when you don't have a job for over a year, well I would love to see anyone be ok with this. And lets don't even talk about banks knowingly giving out loans that would never be paid, then bundling them with the good ones so for down that no one noticed and then selling them off so another bank you have to take the hit, but oh wait, no biggie, the gov't bailed out some of them. . the whole business stinks and they should all burn in hell. I am in no way saying that John Q Public is faultless, but the system as a whole, as their nasty little greedy greasy, grimy hand right in the middle of it.

I am in complete control over my retirement, with no help form the govt I don't need their help in health insurance either. So lets just get them out of everything and we would all be better off. If people can't handle it, oh well then too fricken bad.

 

[PatriciaH]

YOu are so right. I think that this is really what bothers me. I am a SAHP and I do have my own credit, worked for 15 years before I became a SAHM and like several people here, my credit , at that time,was actually better than my DH, but only slightly.

But for the Gov't to sit there and actually tell the banks what they should do to alleviate credit risks is just beyond words for me. They don't know their heads from their butts and spending totally out of control and on things that most of us would find crazy, and yet they feel that they can tell others how to manage.


I wonder if the saying "People in glass houses, shouldn't throw stones" means anything to them.

The Federal Reserve is privately owned. It is not part of our Govt. The pres. can not even get in there

 

[PatriciaH]

But the Federal Reserve is not "the government". The head of the Fed and its Board of Governors are appointed by the President but it is not a branch of the government nor are its members a part of the President's cabinet. It is also run by the representatives from both large corporate banks and smaller regional banks. It operates independently from the federal government and its regulations do not need to be approved by Congress or signed into law by the President.

Kind of makes you go when you think about it. The maniacs who brought us easily accessible credit for all are the exact ones in charge of the insane asylum.

Just saw this-yep!

 

[mhsjax]

SAHP do have income and assets, they share those of their spouses. IF they don't, then I feel sorry for them in that marriage. SAHP are not indentured servants or children! If a SAHP would charge their spouse for the work they do, most working spouses wouldn't be able to afford them!!

Let's get real, we have come along way from Lucy and Ricky and him giving her an allowance . What a way to have lived.

When a parent stays home, yes they make sacrifices. Giving up their financial independence shouldn't be one of them. Consider a marriage a corporate merger...the SAHP is a major stock holder and gets to vote etc...and collects dividends and owns 50 percent of the corporation. That gives them assets and income!! Not honey I need your credit card so I can buy a dress! Geez....

Credit Card companies LOVE that people don't/can't pay off their credit cards! They love the insane interest and fees they collect. Even for what they charge off for those that don't pay for whatever reason, since the other monies balance out their losses, plus their losses are a tax write off.

CC companies consider me a dead beat! They don't want me to do what I do every month! I charge the majority of my purchases (I very rarely carry cash), and I pay my bills in full every month.

And yes, the CC companies created this mess by giving CC like candy at Halloween. Do they have the right to decide who gets credit sure they do. But not to consider the income of the household is stupid. And you are always going to have those that can't handle it adn those that try to beat the system no matter what the laws say.

Exactly. People just don't understand credit card companies don't like people here on the Dis boards. Everyone here and yes me, because I don't use them and have paid them off, is all mature and wonderful and they pay off their card every month. Credit card companies HATE you. YOu are not a good business decision for them, they make no money off of you.

It is a fine line, they want you to revolve, then they will come along and if you apy on time and more than the minimum, they will increase your line, because you are such a "good customer" and they want to help you out. Then they are all so happy to give you tranfer balance checks with a certain amount of time interest free knowing full well that most people won't pay this off in that. Everyone here seems to fell so sorry for them, BULL HOCKEY. It is a game, it is like Vegas, lets see how far in debt we can get people without pushing them over the limit, that way we can make the most money.

the really funny thing is that, I stay home, but I am not the money spender, just as DH he will tell you. I am the cheap one. And he would NEVER, just leave and leave me and the kids high and dry. To me that just speaks to our society and how crappy it has become. I understand that some wives to this behind the DH back and maybe there should be a rule that he has to be on the acct, but this is crazy. And like someone said, they were the SAHP and therefor did most of the spending. YOu watch before too long CC companies will be screaming that people aren't spending enough money. We should all do ourselves a favor and boycott them as a whole, they are the devil in disguise and if you ever worked for one, you would know that.

ETA. Tons of spelling errors, no coffee this am and my head is about to blow off. So just try and make sense of my sadly misspelled words.

 

[Colleen27]

When a parent stays home, yes they make sacrifices. Giving up their financial independence shouldn't be one of them

Exactly. This wouldn't be such an issue if it had been done a generation ago, but in the world we live in a credit score really is an assessment of your worth in the eyes of those you hope to do business with. It isn't just about getting credit; it is about getting a job, securing housing, determining insurance rates (medical, auto, homeowners, you name it), establishing utility service, basically every single aspect of independent living involves judgments based on one's credit score.

 

[iheartdisney]

This should be a lesson learned for everyone applauding and patting themselves on the back when the givernment stopped those evil banks from taking advantage of us.
We are not in this economic mess because people were responsible with credit. The banks are losing money because the Average Joe believes it is easier to walk away from the mess they created than to be a man and pay the piper.
So everyone bangs their chests and say the government MUST step in to stop these abuses. Now you have to live with the result!
LESSON LEARNED: When you open the door to government interference, they never UNDER reach. Just like the proverbial camel in a sandstorm analogy, if you let the camel stick even his head into your tent, before you know what happened, you are out in the storm while the camel enjoys the pleasure and comforts of your hard work.

 

[crisi]

SAHP do have income and assets, they share those of their spouses. IF they don't, then I feel sorry for them in that marriage. SAHP are not indentured servants or children! If a SAHP would charge their spouse for the work they do, most working spouses wouldn't be able to afford them!!

Unfortunately, that is not the legal reality. More unfortunately, even for those people who believe they have great partnerships, a small number of them are going to get blindsided by their husband and discover that this is not the legal reality.

 

[kirstenb1]

The way I'm reading this as a 45 yr old sahm, is if I already have credit in my own name, it's all good. I did work til I was 37, so I have plenty of credit history.

At first this seemed really alarming for younger sahms. But then I gave it some thought...most of us worked at some point, and established our own credit history.

However, for sure, a younger sahm without credit history will be impacted. I guess I'd just revert to a debit card, if that were my situation. My overall spending for the year would go down. No extra expenditures at Christmas or vacation.

I guess this is just part of the general tightening of credit over the last couple of years.

 

[JoiseyMom]

The Federal Reserve is privately owned. It is not part of our Govt. The pres. can not even get in there

The Federal Reserve is not quite privately owned. All its profits is handed over to the US Treasury. Their employees are not Federal Employees. The head of the Fed is put there by the president. It was created by COngress.

http://en.wikipedia.org/wiki/Federal_Reserve_System

It is really strange how it all works. I worked at the FRBNY for a few years and am still confused by it! LOL....

 

[shortbun]

Unless I'm missing something, you can still be an authorized user on another account, and that can be used to build your own credit (not that pp needs it, but those starting out might). Honestly, I don't see a big difference between having a card where the significant other is the primary user verse using their income to get a card for yourself.

Well, it's huge for SAHM's. Any human being should be allowed to have their own credit card-in their name, as long as they can prove they are worthy. I don't have 'income' but I don't need a credit card except for travel when I don't want to carry cash. I do not, however, want to be required to include my spouse in my application. My bank accounts are in my name and that's how I pay my bills. He more relies on my money than I on his yet this law would put me dependent on him as the 'earner' in the family. Stupid and sexist.