Stay at Home Parents Still Having Trouble Getting Cards

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Recently I have received several emails and comments with the same common theme.  The theme is a parent who provides full-time at home care to their children, and wants to get rewards credit cards in their name.  However, they are having significant difficulty because they don’t have sufficient income of their own due to staying home to take care of the kiddos.  If this applies to you or someone you know, this post is for you.
The 2009 Credit Card Accountability Responsibility and Disclosure “CARD” Act that was supposed to help protect consumers, had the unintended (but not surprising) consequence of making it harder for spouses who did not work outside the home to obtain credit cards in their own name.  The Act made it where only an individual’s own ability to pay was considered – not their spouse’s.  However, as I posted last month, the Consumer Financial Protection Bureau has now clarified that the individual income stipulation is only for those under 21, and does not apply for those who are over 21 and have “a reasonable expectation of access” to other funds.  This would include spouses who have a shared bank account, get regular transfers to their account, or similar.
The banks have six months from the date of publication in the Federal Register to comply with this (read the full publication here….it is very long), so that means they have until November 4, 2013.  They can choose to comply earlier.  However, does that mean it will actually be easier for stay-at-home parents to get rewards credit cards on or before November 4th?
Here is the story of one stay-at-home parent who helped inspire this post.
I follow your blog so I was aware when there was a change to allow household income to be used for individuals over 21. This was great news as my wife is a homemaker and the best way to earn points is through card sign up bonuses.
This last batch of applications was our least successful as the American Express application had a web browser issue.  It it never went through even though I have screen prints of each step of the application, and she was denied by Barclays for the Lufthansa card. She effectively went 3 for 5 (big thumbs down). She called first and was told 1) her income of $102k did not make sense for a self employed homemaker and 2) she had too many inquiries in the past 12 months. They indicated that she would only be considered on her individual income and not the household so she adjusted her income down to $1000 for miscellaneous revenue she brings in.
They denied her and wouldn’t split the credit line on her US Airways Card, so I called back to hear for myself, but got the same story. I referenced the recent regulation changed and they were aware of it and said it gave them the option to use household income, but did not obligate them to do so. They went on to describe the normal sources of income they would consider, and I was a little annoyed that they include alimony and child support, but not income from a spouse that my wife would have full access to pay any debts incurred on the card. If we were divorced she would have been approved without an issue.
With that said is there anything we could do to get the card approved as the credit pull is already on her credit report? I have read about people sending letters and having success but I have no idea where I would send a letter and how I should approach the wording of the letter. Sorry for the long message but I just wanted to share our experience and check if you had any advice.
What stands out the most to me in this email is that the Barclays rep said that they have the option to consider household income, but that they are not required to do so.  The new rules don’t go into effect until November 4th, so she could be referencing that detail.  Or, perhaps it is a hint of something that will be a greater issue long-term.  The new rule “permits issuers to consider income and assets to which such consumers have a reasonable expectation of access.”  I am no lawyer, but the word permits seems very different then if it said “requires issuers to consider…”
So it is possible that even after November 4th that parents who don’t work outside of the home may still have trouble qualifying for cards if the issuers don’t consider household income even though this is allowed.  I very much hope that is not the case, but I am slightly concerned given the “permits” wording, and the recent emails I have received similar to the one above.
So what can you do?  I live in a community property state, so with or without this revision, I would personally have no issue putting our shared income on the applications.  I’m not sure my job description is really met by any of the typical drop down boxes, so I would go with “other”.  In addition, praying for instant approvals or at least approvals that come without a phone call is a big one.  If you aren’t the praying type then perhaps a little “rewards card dance” prior to hitting submit may suffice.  Homemaker with a $100,000 income may shock the computer system a bit – though the amount of work is absolutely worth that level of income! 
I very much hope that the situation improves quickly for parents who stay home to take care of their kids.  In the meantime, I know many of you have faced this issue, so please share your tips and what worked/didn’t work so that other stay at home parents don’t get denied for cards when they don’t really need to be.

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Comments

  1. I have a question about this that I haven’t seen mentioned too often. My wife is underemployed right now. On her CC applications can we use my income as well?

    • Dan, falls in the same category as non-working spouses. What I would feel comfortable doing (at least until the revisions go into place) depends on whether or not I lived in a community property state.

  2. Another commenter said it here before when you first wrote about it, but split the rent/mortgage number in half. You do share the house with another person, right? That means you should also “share” the payment.

  3. How do you find out if you/I live in a community property state?

    I live in Florida if you happen to know about that state in particular.

  4. I braved the Dans Deals forum yesterday, and it really looks like Barclays is on to churners. That may be a part of it. My wife got rejected for similar reasons, officially based on her income not being able to support the mortgage by herself, but the recon call noted all the other inquiries and the fact we don’t her other card, the US Airways, at all.

  5. @Ben,

    Here is a list of Community Property States

    Arizona
    California
    Idaho
    Louisiana
    Nevada
    New Mexico
    Texas
    Washington
    Wisconsin

    Hope this helps.

  6. Ben – see http://taxes.about.com/od/taxglossary/g/CommunityProper.htm

    Community Property states include:
    Arizona
    California
    Idaho
    Louisiana
    Nevada
    New Mexico
    Texas
    Washington
    Wisconsin

    Right or wrong, my opinion is that when you are married, all income, assets, and liabilities obtained after the marriage date are shared. Thus, I personally wouldn’t have qualms about listing my income on my unemployed spouse’s credit card application.

  7. For Ben – Florida is not a community property state, but in general, I would always use household income with no reservations.

  8. I don’t know if I would split the mortgage payment in half if my name is on the note. I would think your credit report would have the full amount of the mortgage and payment.

  9. I list either “homemaker” “writer” or “other” as my occupation as I do occasional freelance writing. I arbitrarily decided that my husband awards me an “allowance” of $3000 a month, and then list my income as $36,000. I use my correct mortgage payment (luckily it is quite low) and again arbitrarily decided to list all the interest/dividends we report on our joint tax return as mine.

    During a recon call with US Bank – still waiting to hear what happened – I was asked what part of the mortgage was my responsibility. I said it was a hard question – we are married 35+ years and the mortgage gets paid from a joint checking account. She pushed me, asking can we say 1/3? I said sure. She asked about the $36,000 and I said I get an allowance. She told me I do not have to report alimony and child support and I said I knew that and it was OK. She never asked exactly where the allowance came from.

    Not sure how this will fly with the tricky US Bank recon department, but I was auto-approved for CITI, B of A, Amex and Chase cards. I do have an excellent credit rating and a perfect record for on-time payments.

  10. Another data point: while on with Chase Biz Recon folks earlier this week, I specifically asked if I should give them personal income or household. The agent indicated household was fine and that’s what we reported on the app.

  11. Just FYI, this dilemma is not just felt by younger stay-at-home spouses, but by some retirees. My husband earns 90 percent of our joint income, while I only get Social Security. It’s ridiculous that a good household income and a stellar FICO score (43 years of marriage and never paid a dime of interest) is not enough for some banks. I have several credit cards in my own name from various banks, so I’ll see if that counts for anything the next time there’s a great bonus offer.

  12. PSL, so true. My mother-in-law has hit a very similar problem. The household income will help retirees equally as much.

  13. So if I understand correctly, in a double-income household in a community property state, each spouse can enter the combined income on their applications? e.g. each earn $50k but they claim $100k on their individual apps.

  14. Just tried to use this argument with Citi regarding the AA Platinum Visa and they wouldn’t accept it – said that “unfortunately” they can’t consider household information, despite checking with a supervisor. Oh well. Hopefully after November.

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