Compliance Blog

Written By JiJi Bahhur, Regulatory Compliance Counsel

Recently, the Consumer Financial Protection Bureau (CFPB) finalized amendments to the Credit Card Accountability Responsibility and Disclosure Act (CARD Act), making it easier for spouses and partners who do not work outside of the home to qualify for credit cards.  In the existing regulation, card issuers were limited to consideration of only a card applicant’s independent income or assets, thus resulting in numerous creditworthy applicants – such as stay-at-home spouses and partners – being declined credit card access even though they had the means to pay the debt. 

The final amendments to the CARD Act now allow credit card issuers to consider income that a stay-at-home applicant, who is 21 or older, shares with a spouse or partner when evaluating the applicant for a new account or increased credit limit. From the summary of the final rule:

“The final rule has four main elements. First, the final rule generally removes references to an “independent” ability-to-pay standard from § 1026.51(a)(1) and associated commentary.  As a result, card issuers are no longer required to consider whether consumers age 21 or older have an independent ability to pay; instead, card issuers are now required by Regulation Z to consider the consumer’s ability to pay. Second, in determining a consumer’s ability to pay, the final rule permits issuers to consider income or assets to which an applicant or accountholder who is 21 or older – and thus subject to § 1026.51(a) rather than § 1026.51(b) ‒ has a reasonable expectation of access. The final rule clarifies by examples in the commentary those circumstances in which the expectation of access is deemed to be reasonable or unreasonable. Third, the final rule continues to require in §1026.51(b)(1)(i) that consumers under the age of 21 without a cosigner or similar party who is 21 years or older have an independent ability to pay, consistent with TILA section 127(c)(8). Finally, the final rule clarifies that application of the independent ability-to-pay standard to consumers under 21, consistent with Regulation Z, does not violate the Regulation B prohibition against age-based discrimination.”

The final rule can be found here.  The final rule took effect on May 3, 2013 and requires mandatory compliance by no later than November 4, 2013, although card issuers may, at their option, come into compliance before that date.