Triggering what may be a potential setback for private-label credit card issuers, the Federal Reserve Board on March 18 finalized a rule clarifying elements of the Credit Card Accountability, Responsibility and Disclosure Act that requires issuers to consider only credit card applicants’ individual, not household, incomes.
Credit card applications generally cannot request a consumer’s household income because that term is “too vague to allow issuers to properly evaluate the consumer’s ability to pay,” the Fed said in a press release. Instead, issuers must consider only an applicant’s individual income or salary, the Fed said.
Private-label credit card issuers, including Home Depot Inc. and Dress Barn Inc., complained in comments to the Fed that the proposed rule would severely limit the number of consumers who may qualify for a store card (
In its letter to the Fed, Dress Barn said the proposed rule would have a “detrimental impact on nonworking spouses, who are predominantly women and who depend on credit to manage the family household.”
Industry analysts warned that the rule could restrict private-label credit card issuers’ opportunities to market cards to broader audiences.
The Fed proposed the rule last October as part of its efforts to protect consumers from incurring unaffordable levels of credit card debt as part of the Credit CARD Act (
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