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New Credit Card Rule Will Surprise Many: No Income, No Credit Card

Here is a predicament that quite a few people are going to find themselves in, especially now during the holidays. As a result of the 2009 CARD act, individuals with no income will not be able to get a credit card.

This can be a real problem for some stay-at-home spouses that have traditionally relied on the earning spouse’s income and credit history as a surrogate of their own. Dad brings home the bacon and mom piggybacks off him and uses her very own credit card as she wishes. Those days are over.

Because credit card issuers were so lackadaisical by giving credit cards to everyone and their brother, we found ourselves in quite a mess. In fact, our credit crisis isn’t over yet. Not by a long shot. We have a lot more digging to do to get out of this quagmire.

One of the reforms of the CARD act was a restriction on exactly who will qualify for a credit card. The CARD act has many provisions that are being phased in gradually. This particular provision just took effect on October 1, 2011 so I dare say that most consumers that it will effect don’t even know that it exists.

And now, as the busiest shopping months of the year (December and January) are upon us, and not coincidentally the busiest time for applying for credit card offers, folks that thought they could rely on picking up a credit card to help them buy their Christmas gifts are going to be sorely disappointed.

Household income or combined income of a working spouse will no longer be taken into consideration. It’s all based on the ability to pay now. You can have a stellar credit history but it won’t matter if you can’t show that you have an income.

So what can you do about it? Well, there are several alternatives that are worth looking at. Let’s take a look at those now.

Attain Authorized User Status

An authorized user is someone that is allowed to use the credit card of another individual, usually a spouse or immediate family member, as if it were their own. Understand that any activity on this type of account will reflect on the credit records of both parties involved.

Open a Joint Account

This is probably the most popular form of sharing a credit card account. The breadwinner cosigns for the card and in essence it belongs to both individuals equally. This is quite common in married households. Some parents will also open up a joint account with their children so their kids will have a card for whatever reason they deem necessary.

Community Property Laws

Some states are not affected by this provision at all because they have community property laws. What that means is that regardless of which spouse is earning the income, that very same income also belongs to the non-earning spouse. California, Texas, Arizona, Nevada, Idaho, Louisiana, Wisconsin, New Mexico and Washington all have community property laws.

Get a Job

Of course, the most obvious remedy would be to get get a job and start earning an income. Doesn’t have to be a career per se. A part-time job will suffice in most cases as long as the individual has a strong credit rating.

Keep in mind that although the credit card providers are far more selective in who they give their cards to, they are still in the business of making money so they absolutely do want to find new customers.

Hopefully this information will help out those folks that find themselves affected by this newly enacted provision. As the old saying goes, “there’s more than one way to skin a cat.”

Related Information:

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