Stay-At-Home Mom Fights New Credit Card Rule

[OttoVonBismarck]

I agree that it's a problem and I actually don't feel that the law was necessarily intended to do this to stay at home parents (unintended consequence.) Traditionally the assumption is in a marriage there is joint financial power over the entire household's finances. I don't see why the application shouldn't be considered in terms of household income. Now, I think it is entirely valid for the bank to ask for individual income of both spouses in addition to total household income--that can create a different risk profile. A single person making $120,000 a year and two people making $60,000 a year have different risk profiles.

So while I don't necessarily think this is a good rule, I also don't really agree with these tired old arguments from homemakers:

"Just because I don't get a direct paycheck for [my work], doesn't mean it's not worthwhile work that I'm doing."

She doesn't get a direct paycheck because she does not have a paid position, she does not have a professional occupation, period. I have a child, raising kids is work, but it isn't a job and it isn't an occupation. Banks only care (rightly) about paid occupations, and couldn't give a shit what I do outside of my paid occupation for free.

"I used to be CEO of a small software consulting business and am now staying at home to take care of a toddler and first grader. If you had to pay someone to do what I do now, it would cost you at least $120,000, which is a lot less than what I used to earn," one stay-at-home mom wrote on the online petition. "BTW, it's a 24x7, not a 40 hour per week job. Don't you think I should be allowed to get a credit card on my own?!"

This just isn't true, and I think this is what happens when a yuppie quits their real job to raise kids. They get a little bit of culture shock that sitting behind a desk all day may be a little more glamorous than keeping a house and cleaning up after kids all the time, but that doesn't make it a $120,000 a year job. I have a family friend who is a single mother in St. Louis. About five years ago she got a job as a nanny for a wealthy couple. It pays around $40,000 a year, plus they put her up for free in a townhouse that is a block away from their house so that she is always nearby. She's essentially responsible for the kids she watches anytime the parents aren't home and anytime they come home they may leave at a moments notice and she's expected to come over to watch them. She loves her job, it gives her a free place to live, a decent salary, and the ability to watch her own small child all day while also earning a living. This wealthy family frequently goes on expensive overseas vacations, and when they do our friend and her daughter get to go with them. It's ostensibly "working", but it's working in the Caymans or Australia or New Zealand on a beach somewhere.

If you factor in the free housing it would bump her effective pay over $40k, but it's still nowhere near $120,000. I know other families with live-in nannies who compensate them a lot less than this, the family friend I mention is the best compensated nanny I'm aware of (once you factor in all the perks on top of salary.) Most of the others I am aware of make an hourly wage under $10/hr with little to no benefits. No one is making $120,000 to do these jobs, and lots of the ones I'm talking about are absolutely expected to do more than just babysit. They're expected to clean house, sometimes handle grocery shopping and etc.

Finally, even if professional nannies made $120k that would still be irrelevant, because no one gets paid to clean up after their own family or to raise their own kids, it's a total non-argument.

[Neil]

Yeah, but because her actual argument is stupid, she's trying to turn it into a 'nobody respects stay-at-home moms' thing.

[dps]

She blames that denial on a recent Card Act rule.

The law was passed in 2009 to protect consumers from unfair and deceptive credit card practices. But some stay-at-home parents argue that a Card Act rule that took effect last October has made it harder for them to get approved for credit cards. Aiming to protect consumers from racking up too much debt, the Federal Reserve now requires credit card issuers to consider individual income from applicants instead of household income.

I don't know why she was denied credit, but if it was because of the Card Act and a company otherwise would give her credit, I don't see the compelling state interest in prohibiting it from doing so. It isn't as though stay at home moms racking up credit card debt caused the financial crisis.

And the article doesn't even say that lenders are forbidden to issue credit cards to stay-at-home parents who don't have any individual income of their own, only that "the Federal Reserve now requires credit card issuers to consider individual income from applicants instead of household income".  And I know from personal experience that lender will in fact lend money to people with no income (though they may have wised up some in the last couple of years).

[CountDeMoney]

Nobody is going to extend credit to individuals with no reportable income that can't be recouped via collection actions or judgments.  "Stay-At_Home Moms" are in the same league as the unemployed and the disabled.

[Jaron]

Stay at Home Mom = I want to stay home, put kid in the play pen and watch Sally Jesse until 4 pm. Vacuum 5 minutes before man gets home and bitch and moan about how hard my day was.

[dps]

Nobody is going to extend credit to individuals with no reportable income that can't be recouped via collection actions or judgments.  "Stay-At_Home Moms" are in the same league as the unemployed and the disabled.

A)  You are greatly overestimating the intelligence and judgement of lenders.

B)  Stay-at-home parents DO have recoverable assets, depending on the jurisdiction--their spouses (who, presumably, do have incomes) are responsible for their debts. 

[merithyn]

Yeah, but because her actual argument is stupid, she's trying to turn it into a 'nobody respects stay-at-home moms' thing.

This was actually the part that turned me off her side of things. It's a by-product of a law, not the intent, so her turning it into a whole NOBODY RESPECTS THE STAY-AT-HOME MOM AND I'M TIRED OF IT!! schtick makes no sense.

As for the idea of them just getting a job, for some families, it costs more to get a job than it does to stay home. Monkeybutt should attest to this. Having five kids under five at home would cost him a lot more than anything his wife would make were she to get a job. I went through the same thing. It was, honestly, far more cost-effective for me to stay home than for me to get a job for the first eight years that I had kids. As soon as it made sense financially, I was out the door and making a paycheck, believe me. 

[Ideologue]

She blames that denial on a recent Card Act rule.

The law was passed in 2009 to protect consumers from unfair and deceptive credit card practices. But some stay-at-home parents argue that a Card Act rule that took effect last October has made it harder for them to get approved for credit cards. Aiming to protect consumers from racking up too much debt, the Federal Reserve now requires credit card issuers to consider individual income from applicants instead of household income.

I don't know why she was denied credit, but if it was because of the Card Act and a company otherwise would give her credit, I don't see the compelling state interest in prohibiting it from doing so. It isn't as though stay at home moms racking up credit card debt caused the financial crisis.

The Government knows your interests better than you do.

Correct.

[Ideologue]

Nobody is going to extend credit to individuals with no reportable income that can't be recouped via collection actions or judgments.  "Stay-At_Home Moms" are in the same league as the unemployed and the disabled.

A)  You are greatly overestimating the intelligence and judgement of lenders.

B)  Stay-at-home parents DO have recoverable assets, depending on the jurisdiction--their spouses (who, presumably, do have incomes) are responsible for their debts.

I don't think that's true in most jurisdictions.  In community property states, perhaps.

[Tamas]

She blames that denial on a recent Card Act rule.

The law was passed in 2009 to protect consumers from unfair and deceptive credit card practices. But some stay-at-home parents argue that a Card Act rule that took effect last October has made it harder for them to get approved for credit cards. Aiming to protect consumers from racking up too much debt, the Federal Reserve now requires credit card issuers to consider individual income from applicants instead of household income.

I don't know why she was denied credit, but if it was because of the Card Act and a company otherwise would give her credit, I don't see the compelling state interest in prohibiting it from doing so. It isn't as though stay at home moms racking up credit card debt caused the financial crisis.

The Government knows your interests better than you do.

Correct.

filthy communist

[Jaron]

First Central Heat, now this.. eh, Tamas?

[Ideologue]

She blames that denial on a recent Card Act rule.

The law was passed in 2009 to protect consumers from unfair and deceptive credit card practices. But some stay-at-home parents argue that a Card Act rule that took effect last October has made it harder for them to get approved for credit cards. Aiming to protect consumers from racking up too much debt, the Federal Reserve now requires credit card issuers to consider individual income from applicants instead of household income.

I don't know why she was denied credit, but if it was because of the Card Act and a company otherwise would give her credit, I don't see the compelling state interest in prohibiting it from doing so. It isn't as though stay at home moms racking up credit card debt caused the financial crisis.

The Government knows your interests better than you do.

Correct.

filthy communist

But I live in a country where I'm free to be so.  It's pretty swell!

[Neil]

She blames that denial on a recent Card Act rule.

The law was passed in 2009 to protect consumers from unfair and deceptive credit card practices. But some stay-at-home parents argue that a Card Act rule that took effect last October has made it harder for them to get approved for credit cards. Aiming to protect consumers from racking up too much debt, the Federal Reserve now requires credit card issuers to consider individual income from applicants instead of household income.

I don't know why she was denied credit, but if it was because of the Card Act and a company otherwise would give her credit, I don't see the compelling state interest in prohibiting it from doing so. It isn't as though stay at home moms racking up credit card debt caused the financial crisis.

The Government knows your interests better than you do.

Correct.

filthy communist

But I live in a country where I'm free to be so.  It's pretty swell!

Well, you can express your ideas, but fortunately there is the rule of law to prevent you from robbing and murdering everyone the way you would like to.

[derspiess]

Well, you can express your ideas, but fortunately there is the rule of law to prevent you from robbing and murdering everyone the way you would like to.

[Malthus]

I agree that it's a problem and I actually don't feel that the law was necessarily intended to do this to stay at home parents (unintended consequence.) Traditionally the assumption is in a marriage there is joint financial power over the entire household's finances. I don't see why the application shouldn't be considered in terms of household income. Now, I think it is entirely valid for the bank to ask for individual income of both spouses in addition to total household income--that can create a different risk profile. A single person making $120,000 a year and two people making $60,000 a year have different risk profiles.

So while I don't necessarily think this is a good rule, I also don't really agree with these tired old arguments from homemakers:

"Just because I don't get a direct paycheck for [my work], doesn't mean it's not worthwhile work that I'm doing."

She doesn't get a direct paycheck because she does not have a paid position, she does not have a professional occupation, period. I have a child, raising kids is work, but it isn't a job and it isn't an occupation. Banks only care (rightly) about paid occupations, and couldn't give a shit what I do outside of my paid occupation for free.

"I used to be CEO of a small software consulting business and am now staying at home to take care of a toddler and first grader. If you had to pay someone to do what I do now, it would cost you at least $120,000, which is a lot less than what I used to earn," one stay-at-home mom wrote on the online petition. "BTW, it's a 24x7, not a 40 hour per week job. Don't you think I should be allowed to get a credit card on my own?!"

This just isn't true, and I think this is what happens when a yuppie quits their real job to raise kids. They get a little bit of culture shock that sitting behind a desk all day may be a little more glamorous than keeping a house and cleaning up after kids all the time, but that doesn't make it a $120,000 a year job. I have a family friend who is a single mother in St. Louis. About five years ago she got a job as a nanny for a wealthy couple. It pays around $40,000 a year, plus they put her up for free in a townhouse that is a block away from their house so that she is always nearby. She's essentially responsible for the kids she watches anytime the parents aren't home and anytime they come home they may leave at a moments notice and she's expected to come over to watch them. She loves her job, it gives her a free place to live, a decent salary, and the ability to watch her own small child all day while also earning a living. This wealthy family frequently goes on expensive overseas vacations, and when they do our friend and her daughter get to go with them. It's ostensibly "working", but it's working in the Caymans or Australia or New Zealand on a beach somewhere.

If you factor in the free housing it would bump her effective pay over $40k, but it's still nowhere near $120,000. I know other families with live-in nannies who compensate them a lot less than this, the family friend I mention is the best compensated nanny I'm aware of (once you factor in all the perks on top of salary.) Most of the others I am aware of make an hourly wage under $10/hr with little to no benefits. No one is making $120,000 to do these jobs, and lots of the ones I'm talking about are absolutely expected to do more than just babysit. They're expected to clean house, sometimes handle grocery shopping and etc.

Finally, even if professional nannies made $120k that would still be irrelevant, because no one gets paid to clean up after their own family or to raise their own kids, it's a total non-argument.

We paid our live-in nanny room & board plus $1200 a month. Mind you she was a relation, but this was the usual arrangement for live-ins who do not drive, speak English or have special educational skills or requirements a few years ago in Toronto. 

http://www.nannygps.com/nanny_salary.jsp#canada