Anger, outrage, and controversy surrounds the newest stunt being pulled by banks. This does not involve a high annual fee, $5 monthly fees to access your debit card, or the predatory unfairness of high interest rate student loans (a total snafu: I typed “stupid” instead of “student” without thinking about it. My subconscious speaks). The Federal Reserve has acted to revoke the privilege of plastic to
those who do not earn an income of their own. Gone are the days of qualifying for a person card under the umbrella of your household’s earnings. Personal responsibility: it’s time to man up.
This newest round of bank versus consumer revolves around a new steadfast guideline for obtaining credit: you must have a job.
Okay, you say, this sounds obvious enough. Why would a bank give money to someone who does not have the means to pay it back?
Let’s go further. Take Sally Student and Mary Mother, both “unemployed” individuals looking to apply for a credit card, circa 2011.
Sally fills out her application and lists her student loans as income. She is approved, and receives a shiny new piece of plastic, a sense of freedom. With this new freedom, she will buy clothing from the mall, beers from the bar, and a plane ticket to Cancun for spring break. She graduates with horrible credit, a maxed out credit card, and interest fees through the roof. She cannot get a job because her potential employers check her credit prior to sending an offer letter her way, and she declares bankruptcy at the ripe age of 22, from her parent’s couch, where she now sleeps. Sally’s Visa card turned into a death sentence for Sally, who is under the grasp of bad credit for the next seven years.
Mary, on the other hand, is a stay-at-home mom to two wonderful children. She spends her days and nights feeding, bathing, and educating her kids. To the outside world, her life seems idyllic – her husband works hard, keeps a roof over her head and food on the table. What people don’t see is the black eye that is hidden by her designer foundation and the emotional scars on her heart from years of verbal abuse. Enough is enough, she decides one night, and after her husband falls asleep she opens her mail to find her new, shiny new piece of plastic, a sense of freedom. With this card, she will be able to advance herself enough cash to put a deposit on an apartment for herself and her children, she will be able to hire an attorney, and she will be able to start her life over anew. Before she was married, she was an independent woman and she knows how to work hard, pay her bills, and survive any situation. Her MasterCard gave her a way out – a way to escape a violent situation safely, and a way to float her expenses until she landed her new job.
While these are extremes on both ends of the spectrum, they bring up valid points- some college students might be able to handle a credit card with ease, while some stay-at-home parents might rack up hundreds of thousands of dollars worth of debt over designer diaper bags and high-priced home goods. It really depends on the individual, because I many successful “working” Americans who fell on hard times and relied on good ol’ American Express to save the day.
All-in-all, it would be best for everyone if people could learn to live within their means and cut up their credit cards. However, having a thin credit profile actually hurts your score and could affect your chances of securing a loan in the future. What the….
No matter what side of the debate you are on, there will surely be winners and losers. I know for a fact that my credit card helped me through college, and was paid in full months after graduating. Then again, I worked. And, although I am in a happy marriage, I know that I always have a wallet full of plastic in case times got tough and I had to find my own way. There’s something reassuring about this, but downright scary at the same time…
I posed this question on my Facebook page, and these are some of the responses I got about the pending changes in lending:
This is a way for the credit card companies to recharge themselves (no pun intended). Many have lost so much money because of people charging to the limit and than not paying the card or filing bankruptcy. ~ DM
I think it’s good. Don’t spend money you don’t actually have. I haven’t had a credit card in YEARS…. That’s just my opinion though. ~EW
No income…. No loan! NO SOUP FOR YOU ~LK
I think it’s bad. I think anytime a law tightens or eliminates the ability for their to be exceptions then that is bad. There are many stay-at-home moms that have healthy financial habits in a household that is not struggling, but under this new law, they would be denied. I thought the whole point of a credit score is to evaluate one’s risk. Just my two cents! ~RD
I want to hear from you – do you think this is over-regulation or a step in the right direction?