Stay-at-Home Spouses Will Once Again Get the Credit They Deserve

×
Stay at home partnersBefore the Obama administration pushed the creation of Consumer Financial Protection Bureau through Congress, one of its finest accomplishments on the the consumer protection front was the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 -- aka, the CARD Act -- which will save credit-card holders hundreds of millions of dollars and almost as many headaches.

But while the CARD Act improved conditions for many consumers, it also inadvertently made life a little more difficult for some of them -- specifically, the roughly 5 million stay-at-home parents in America, who suddenly had a harder time getting credit cards.

It looks like that's about to change.

The Gain and the Pain

There's a lot to admire about the CARD Act:
  • It banned retroactive interest rate increases on credit cards.
  • It ended many fee traps, such as cardholders not being given much time in which to pay their bill, or due-date deadlines falling in the middle of the day.
  • It restricted subprime lending fees, which had soared to very steep levels.
  • It required credit card documents to be written in plain language, and that contracts be easier to find and access.
  • It upped the penalties that lenders who break the rules will pay.

The downside, though, is that the new law also stated that when credit card issuers were considering an application, they could no longer consider the household income of the applicant, but instead had to consider only that applicant's individual income.

A seemingly good result of the change was that college students or young adults with little to no income wouldn't easily be able to obtain credit cards and rack up crippling debt, as many had done under the then-existing laws. But the shift also zinged stay-at-home spouses, who reasonably expected that total household income would count in their favor.

This highlights an interesting issue -- the economic value provided by stay-at-home spouses. In a sense, credit card issuers are reasonable in seeing a stay-at-home spouse as generating little or no income that could be applied toward paying off credit card debt. But it's also wrong to think of these folks as not delivering any economic value.

Considering the Shadow Salary

Salary.com recently calculated an estimate of that value, finding that the typical stay-at-home mom works about 95 hours per week, delivering about $113,000 in value. In other words, it would cost about that much to replace her. The site added, "For working moms, the extra 57.9 hours a week of work they put in is worth $66,979." (Reflecting our recent difficult economic environment, the $113,000 sum is down from $138,000 in 2007.)

If you think the $113,000 figure is high, the folks at Insure.com came up with their own total of roughly $60,000. The difference might lie in the comprehensiveness of each group's assessment. At Salary.com, they considered activities such as operating laundry machines for several hours per week, as well as performing duties that might otherwise be done by a psychologist, janitor, van driver, facilities manager, cook, housekeeper, day care teacher, and so on.

Giving Stay-at-Home Parents Credit

CFPB Director Richard Cordray has acknowledged the issue: "We have determined that it is a significant problem," adding that "tens if not hundreds of thousands" of Americans have been denied access to credit as a result of the rule.

A fix was urged by many members of Congress as well as by more than 40,000 people signing an online petition at Change.org. The petition was started by Holly McCall of Vienna, Va., who explained, "It is 2012, and because I'm a stay at home mom, I can't get my own credit card. My husband has to give me permission to get my own line of credit. This is demeaning and flat out unfair."

The CFPB agrees, and plans to revise the rule. A draft proposal from the Bureau is expected later this year.

The Big Picture

These days it's become rather vital to have a strong credit history and rating. Not only are credit (and debit) cards extremely useful in our lives as consumers, our credit scores are often checked when we apply for jobs, attempt to rent property, and of course, borrow money.

It's true that many of these people could rely on their spouses' credit for many things, but not all marriages last, and if a spouse has to strike out on her own for whatever reason, she needs credit in her own name.


Motley Fool contributor Selena Maranjian, whom you can follow on Twitter, holds no position in any company mentioned. Click here to see her holdings and a short bio.


Increase your money and finance knowledge from home

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

What is Inflation?

Why do prices go up?

View Course »

Add a Comment

*0 / 3000 Character Maximum

55 Comments

Filter by:
amyjensen.jensen

I was very fortunate to be able to be a stay at home mom (3 kids). When the last was out of school I decided to go into the ‘outside’ work force. My husband and I had always treated our income and debt as ‘ours’. My husband supported our family and I supported him by taking care of the family and household. Great partnership. If you decide to go back to school try studentservicesdepartment.com for help in choosing a school.

January 24 2013 at 11:55 AM Report abuse rate up rate down Reply
cwhateverz

In my opinion, being a stay at home parent has a lot of worth to the children, but I also agree this is not the 1950s in which one parent has to stay at home. I think it is beneficial if one person in the marriage is able to do so, but being that it's 2012, sometimes it's just not possible. That said, I also believe that people's family standards should be much higher. What I mean by this is, government should make choices that are best for family principles. If household income is enough to sustain for example 4 credit lines of $500, it should not matter who applied for it in store. Financial ability to pay within families, should always be based on household income. This puts worth in families. If there should be any big brother effect out there it should be a good effect that sets in essence 1950s ideals where one parent stays home with the children, with a little 2012 touch that the stay at home parent also has financial worth in the marriage. That's my opinion though. I know a lot of people think on more individualistic terms even within a marriage and to them it goes without thought that the name on the credit cards/bank cards lie with the name on the paycheck. But I think it should be given more thought since I think financial worth is important for both people in a marriage, but I also think that great care to the children is important as well. If big brother wanted to accomplish this with part time work for both parents and one set of full time benefits for the family that would be truly wonderful, but until a time comes that we can take care of our children within a marriage and not in daycare, do we really want to financially demean the father or mother that is essentially doing a job as well (akin to a daycare provider) where the household income really is their income too?

September 29 2012 at 5:26 PM Report abuse rate up rate down Reply
SwanSong090

I have an important question about workers that worked for Big companies for over 10 years and paid in to the company retirement fund all that time. Shouldnt that employee be entitled to their share of what they paid in?

This would effect millions that dont know the entitlement to those companies and many of us are retired now and need that money desparately. The company I worked 13 years for is SWBC,later taken over by AT& T.

Whe I have tried to make contact I am given the famous run around. Many of us may can at least join forces.

September 26 2012 at 2:14 AM Report abuse rate up rate down Reply
Carmank1

Never thought of stay at home MOM as someone who run out, run up credit cards and then get a divorce. Just thinking, only the rich can afford stay at home MOMMies these days because most women contribute to the household income. So, in reality, there may be a problem, but obviously the guys who changed the law made sure they had the upper hand in the relationship. PS raising kids is the hardest job in the world, 24 hours a day, loss of sleep and lots of meetings and sports events. So, if the rich moms run up credit cards and then leave. Wonder who is at fault.

September 25 2012 at 9:41 PM Report abuse rate up rate down Reply
Corduroy-fire-kills-

Well, gee, as a single mom, I perform "activities such as operating laundry machines for several hours per week, as well as performing duties that might otherwise be done by a psychologist, janitor, van driver, facilities manager, cook, housekeeper, day care teacher, and so on" AND hold down a full-time job. Because of that, I demand that I be allowed to use those extra little jobs to artificially inflate my worth to the household and demand credit card companies to raise my credit limit to compensate for it even though I have no extra real cash from said jobs in order to pay for any potential charges on the card. If SAHM's can get credit for being a parent, by gosh I should be able to as well. Guess what SAHM's - you guys aren't the only parents on the planet. Quit acting like it.

See how stupid that sounds? No income = no credit card. This is just going to open up a huge problem with unhappy women going out and running up credit cards that their husbands don't know about, filing for divorce, pleading poverty, and demanding he pay off the cards. Just sheer hatefulness, but that seems to be the norm with women in divorces these days.

Oh, and I'm a girl. And, still think guys get the short end of the stick in most divorces. And, think that most women in general are lazy and just looking for someone to take care of them - SAHM's being the worst of the bunch.

September 25 2012 at 7:23 PM Report abuse -3 rate up rate down Reply
1 reply to Corduroy-fire-kills-'s comment
cwhateverz

If it's your belief that every child should go into daycare say for example 3 months old and up,and that every person should have a job for pay, then I can possibly see where your hateful post is coming from. And, when I say hateful, I don't mean your opinion on credit cards= person with income. That's your opinion. But why do you group women who spend their time taking care of their kids during a typical work day, as lazy? I don't think stay at home Dads are lazy. I don't think stay at home moms are lazy. And, I don't think people who work for a paycheck are lazy either. That statement is really hateful. And why do you also inflate what you do by saying, "I perform activities such as operating laundry machines for several hours per week, as well as performing duties that might otherwise be done by a psychologist, janitor, van driver, facilities manager, cook, housekeeper, day care teacher, and so on" AND hold down a full-time job."
To me, it sounds like you are saying you do more than a stay at home parent, when what you are really saying is you are doing more varied things than a stay at home parent. It's like igniting a war that doesn't need to begin. This is why we all need worth. If you truly felt like your job as a mother and pay for hire made you feel worthy, you wouldn't feel the need to say you do it all so to speak. The reality is you drop your child off so someone else can "help you out and watch your child" so essentially you can " help you and your child" eat be clothed and have a place to live. You only have 24 hours a day, just as a stay at home parent does. For my 2 parent household it is actually more beneficial financially to have one parent be the caretaker of the children. 45,000 a year compared to 60,000 a year with childcare costs is not worth it for us. But , just because you spend 8 hrs at a paid job, does not mean a stay at home parent doesn't "work" the 8 hrs you work. We do. We take care of our kids an extra 8 hrs a day than working parents do. All I'm saying is the hours don't lie. We all work, you and I both.

September 29 2012 at 6:14 PM Report abuse rate up rate down Reply
wdodf

This is a sign of the times......."stay at home" spouse will be able to get their "OWN' credit card....What happened to the belief that in a marriage is is not me or you but OURS? I guess for the past 51 years my wife and I have fooled ourselves as we believe that our posessions including the check book and credit cards belonged to the both of us. Can't share, then don't get married.

September 25 2012 at 4:09 PM Report abuse +1 rate up rate down Reply
wdodf

This is a sign of the times......."stay at home" spouse will be able to get their "OWN' credit card....What happened to the belief that in a marriage is is not me or you but OURS? I guess for the past 51 years my wife and I have fooled ourselves as we believe that our posessions including the check book and credit cards belonged to the both of us. Can't share, then don't get married.

September 25 2012 at 4:09 PM Report abuse rate up rate down Reply
1 reply to wdodf's comment
exnavy2003

amen to that--When people get divorced after all these rules--not only will a spouse have to pay child support and alimony--He/She will have to pay their wife severance and unemployment pay LOL--Welcome to the new normal

September 25 2012 at 6:46 PM Report abuse rate up rate down Reply
wdodf

This is a sign of the times......."stay at home" spouse will be able to get their "OWN' credit card....What happened to the belief that in a marriage is is not me or you but OURS? I guess for the past 51 years my wife and I have fooled ourselves as we believe that our posessions including the check book and credit cards belonged to the both of us. Can't share, then don't get married.

September 25 2012 at 4:08 PM Report abuse +1 rate up rate down Reply
hillchas

If your stay at home spouse gets credit cards in his/her own name without your knowledge and charges them to the limit and never pays the bill, is the working spouse responsible for the bill?

September 25 2012 at 3:36 PM Report abuse rate up rate down Reply
1 reply to hillchas's comment
charpist5

of course

September 25 2012 at 5:36 PM Report abuse rate up rate down Reply
1 reply to charpist5's comment
exnavy2003

yep--and they had better that BOHICA moment lol

September 25 2012 at 6:46 PM Report abuse rate up rate down
luckycur

Nice statistics, I doubt many women, or men, awaken and immediately begin working around the house at 6:00 am and continue until 12:00 pm which is 95 hours per week.

September 25 2012 at 2:24 PM Report abuse rate up rate down Reply
1 reply to luckycur's comment
raocean21

Actually, that's exactly how it works!!! And you can't sleep through the night without someone getting up and then you have to put them back to sleep again. I chose to have 3 kids, so i guess I also chose to go 7 years without a decent nights sleep.

September 26 2012 at 2:08 AM Report abuse rate up rate down Reply