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Just because you can get a credit card, should you?
It's a question that popped into my mind while reading about a recent rule change adopted by the Consumer Financial Protection Bureau. The new rule addresses a provision of the CARD Act that effectively blocked stay-at-house spouses from obtaining new credit cards. Under the act, credit card companies had to consider an individual's independent income and assets rather than those of the household. For stay-at-home moms and dads with no earned income, that meant no new credit cards.
Now, the CFPB says card issuers can use household income for stay-at-home individuals who are older than age 21. According to a statement from bureau director Richard Cordray, the change will "ensure responsible access to credit for American families."
At risk of offending stay-at-home parents everywhere, my first thought was that if someone doesn't have an income, maybe they shouldn't have a credit card. After all, there is already the option to obtain a credit card jointly with a spouse or become an authorized user on another person's card.
Is there really a reason for a stay-at-home spouse or partner to have their own card? Turns out, there are at least three reasons.
1. Credit scores are an individual thing
Being an authorized user on another person's credit card is not the same as having your own card when it comes to building a credit history and boosting your credit score. There is no need to have a huge credit limit or run up a mountain of debt. Even a secured credit card can help establish your score.
2. Emergencies happen
Stay-at-home spouses and partners don't generally stay at home all the time. Flat tires and blown transmissions can happen anywhere and having your own card in a back pocket offers a little extra security. In addition, in the event the income-earning spouse or partner becomes incapacitated, it may be useful to have a card in your own name.
3. You may not always be part of a couple
Finally, couples don't always stay couples forever. Divorce and break-ups happen every day. Even the most rock-solid couples aren't immune from the tragedies that leave widows and widowers behind. Having your own card can help you prepare for that day when you may have to fly solo.
So a stay-at-home spouse getting a credit card does make sense. However, it comes with the caveat that those without independent incomes should be careful of what they charge. If your husband were to leave tomorrow and take his income with him, how would you pay off your $3,000 credit card bill?
For those without independent income, it might be best to use a joint account for regular purchases and hold onto the individual card for emergencies or special occasions -- such as when you don't want to ruin the surprise of a birthday present.
Credit cards are a valuable financial tool for everyone, and now, thanks to the new CFPB rule, stay-at-home spouses and partners can take advantage of the credit card offers that arrive in the mailbox.