Do Credit Card Laws Not Value Homemakers?

Stay-at-home mom Holly McCall says she manages her family's finances and has perfect credit. But due to a federal law, she was denied a credit card because she doesn't make an income. McCall wants the law changed, but Aracely Panameno with the Center for Responsible Lending says the law is necessary. Host Michel Martin speaks with both women.

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MICHEL MARTIN, HOST:

I'm Michel Martin and this is TELL ME MORE from NPR News. Later in the program we'll get reaction to the sentence a judge handed down to Dahrun Ravi. He is the former student at Rutgers University who streamed video of his freshman roommate, Tyler Clementi, having an intimate encounter with another man. Clementi later committed suicide. Law professor Paul Butler gives his take on the decision. That's next.

But we wanted to start today with a personal finance issue that's in the news and it's also a question that's sure to start a spirited discussion at the dinner table. What's the value of the work homemakers do? To Holly McCall and the thousands of people who've signed a petition agreeing with her, that's exactly the question that's been raised by a new law that's supposed to protect consumers from getting in over their heads in credit card debt.

Holly McCall is a stay-at-home mom of two. She tells us she's the one who manages the household budget. She says she's got excellent credit. So imagine her surprise when she was denied a credit card at Target in her own name because she does not have her own individual income. Holly says her denial was based on a rule from a credit card reform act that went into effect in 2010.

It's been interpreted by card issuers to require that individuals without an individual income cannot use household income to apply for a credit card without the permission of the breadwinner. Holly thinks that's demeaning to stay-at-home moms and dads like her and she's trying to get that rule changed. And she's with us now. Thanks so much for joining us.

HOLLY MCCALL: Thank you for having me. I'm so happy to be here.

MARTIN: For another perspective, we've also called Aracely Panameno from the Center for Responsible Lending. That's a non-profit, nonpartisan organization that works to protect homeownership and family wealth by fighting predatory lending practices. Aracely is also a regular on our weekly parenting segment. Aracely, thanks so much for joining us also.

ARACELY PANAMENO: A pleasure to be with you.

MARTIN: So Holly, tell me how you reacted when you found out that you had been denied.

MCCALL: Well, once I got past the feelings of shock, surprise, and disappointment, I felt pretty motivated. So I decided I needed to figure out how to fix the broken rule that was stopping me from being able to get a credit card in my own name.

MARTIN: Well, you claimed your household income. I mean, because your own individual income presumably at this moment is zero, or pretty small, right?

MCCALL: So I didn't claim my household income because the application asks very specifically for your individual income now.

MARTIN: Individual income.

MCCALL: Right.

MARTIN: So you claimed zero income?

MCCALL: Yes. That was the honest answer to the question.

(SOUNDBITE OF LAUGHTER)

MARTIN: Did you really expect to get a credit card with zero income?

MCCALL: I didn't, but I had been approved for a credit card in the past since I had been a stay-at-home mother and in the past I'd been able to put down my household income. So I was a little bit surprised when I had to answer the question in the way that I did.

MARTIN: Is your objection that there was no opportunity to claim household income or is your objection that you had to get your husband to co-sign?

MCCALL: It's the implication that I would have to have his permission, although I'm the main financial decision maker, at least on a day to day basis in the household, and I have complete access to the income that comes into our household. I think we're fortunate that I'm able to be home with my children and I feel like I'm being penalized for that.

MARTIN: In fact, you took it to another level. I mean, you started a petition on Change.org and you also apparently went to the Consumer Financial Protection Bureau and I think you and some of your other folks went dressed up in, what, some '50s outfits to say this isn't "Mad Men," you know, get over yourselves. Right?

MCCALL: Yeah, exactly. It really feels like a flashback to about half a century ago where if I want to have a credit card, I need his explicit permission.

MARTIN: What reaction have you gotten to the petition, to your activism around this?

MCCALL: One thing I've discovered is that the authors of the bill, Carolyn Maloney and Louise Slaughter, have actually gone on the record with a letter to the Consumer Financial Protection Bureau stating that this is not what they intended, for it to have been interpreted as broadly as it has been.

MARTIN: Aracely, we wanted to invite you because you have a slightly different take on this topic. But first, can you remind us exactly what this credit card act was designed to do? What was it for?

PANAMENO: So it was actually designed to offer protections to consumers because in the preceding 10 years, credit card companies and lenders in general had been opening up this spigot of credit, so if you were breathing, they would give you credit irrespective of your ability to repay.

MARTIN: Aracely, what about Holly's point that in essence the household income is her income as well and that the very definition of marriage is that their assets are shared and combined?

PANAMENO: So I think that, you know, I hear her frustration, so I'm hoping that we're not asking credit card companies - that would be the last entity I would ask to make a judgment as to the status of a relationship, and so while I hear her frustration, you know, we wanted to make sure that consumers were being treated fairly and that credit card companies were not taking advantage of those that could not fend for themselves.

I think that one biggest category of people that would be offered credit irrespective of their ability to repay was students. So minor students going to college, they would be bombarded and approved for credit cards, and they had no jobs and so students would graduate from college with a lot of student debt and on top of that a lot of credit card debt.

MARTIN: Holly, what about that point that Aracely is saying, that this is meant to protect consumers from getting in over their heads on debt and that if you don't have an individual income, that from the - let's just take the standpoint of the credit card companies, that it's common sense for them to want to know that the person who does have the income is a willing participant in the agreement to repay this debt. What do you say to that?

MCCALL: It's actually my understanding that the credit card companies opposed interpreting the credit card act in a way that was applied broadly, as it has been to the household income change, and it was intended to protect the young adults and the students, which I completely support, and that is not an aspect that I would propose changing.

But for a married individual, particularly such as myself, where the income is deposited into a joint account, I have complete access to it, we file our taxes together, excluding me from being able to consider that my income is demeaning and it makes me feel like I am not an equal partner financially in the relationship, which I am.

MARTIN: If you just joined us, this is TELL ME MORE from NPR News. I'm speaking with Holly McCall. She's a stay-at-home mom of two and was denied a store credit card because of her lack of individual income. She was not allowed to claim her household income. We're talking about that. Also with us, Aracely Panameno from the Center for Responsible Lending.

Holly, what about the argument, though, that if you file your taxes jointly, it's a small step to just have your husband sign the credit card application?

MCCALL: I don't actually have a problem having the discussion with my husband and feeling that we are on the same page. In fact, before I applied for the Target credit card, we discussed that we wanted that for our household. But I'm not allowed to speak on behalf of the household, is really where I have the issue.

MARTIN: Aracely, what about that? What about Holly's argument that students are different from spouses? You know, a minor child, or even a child who's not a minor who's still in college but is financial dependent on the parents, is in a very different position of claiming access to household resources than a spouse. What about her argument?

PANAMENO: You know, over 50 percent of marriages end in divorce. If such an event were to happen, Ms. McCall would end up in a worse situation after a divorce, being in a deeper hole with credit that she wouldn't necessarily be able to pay because she hasn't had income.

MARTIN: So, Holly, last week you delivered a petition to the Consumer Federation Protection Bureau. You actually met with the director, Richard Cordray. Do I have that right? [POST-BROADCAST CORRECTION: the Consumer FINANCIAL Protection Bureau]

MCCALL: Yes. Yes, that's right.

MARTIN: How did that meeting go?

MCCALL: I thought it was a very productive and positive meeting. He and his staff met with us and heard our concerns and we discussed with a very good collaborative effort what we thought could be potential solutions or how we need to evaluate the scope of this problem. And his staff has taken that away and in a month they're going to let us know what they think they potentially could do about this problem.

MARTIN: What can they do? I mean, it's interesting just listening to the two of you. You're both - you and Aracely are both intelligent, thoughtful women, parents with your own life experiences that you're bringing to bear and I'm guessing that people listening to this conversation are kind of changing sides, depending on where they are in this conversation. I'm just wondering, what would be the middle ground here?

MCCALL: I think giving the credit card companies, who really are the experts at assessing the credit risk and the ability to repay, the leeway to consider the household income for certain individuals would be fair and what that looks like, I think, is something that we'll have to wait and see.

MARTIN: But, so for you, this feels as though you are disempowered to speak on behalf of your household. You're not being recognized as an equal partner in the household because the income that is earned for the household is not earned by you?

MCCALL: Right. We made the decision that our household could function comfortably with the single income and, when we made that decision, there wasn't this clause where I couldn't use my household income and now I feel that that decision is being devalued because I'm not able to speak as a member of the household when it comes to credit now.

MARTIN: Aracely, though, does the perspective of the government - or this regulation and how it's being interpreted - isn't this undermining of the whole concept of marriage? I mean, you know, the vows, as I understand, are for better, for worse, for richer, for poorer, in sickness and in health. I mean, why isn't this undermining of the whole concept?

PANAMENO: So the law is not a statement on marriage or marriage law. The law is a statement of reestablishing ability to repay, which underwriting standards had been thrown out the window. If you could chew gum and breathe, people would issue you credit.

In today's market, even if Ms. McCall were to walk into a payday lending shop, whom - you know, which I consider predatory lenders - they would not offer her credit because the first thing that they would ask her for would be evidence of income, and if she doesn't have income, they wouldn't give her a payday loan.

MARTIN: So, Holly, where does this stand now? Have you - how badly do you want that card? Are you going to get your husband to sign that application or are you going to hang tough on this and...

MCCALL: I don't want the card badly. Right now it's really a matter of principle. I think that this is unfair and so I'm going to work to change it.

MARTIN: Well, to be continued. It's an interesting conversation. Thank you both so much. Holly McCall is a stay-at-home mom from Vienna, Virginia. She says she was denied a credit card, despite her impeccable credit because she does not have individual income, and she started a petition on Change.org to contest this practice. She was kind enough to join us here in our Washington, D.C. studios.

Aracely Panameno is with the Center for Responsible Lending. That's a nonprofit, nonpartisan organization that works to protect home ownership and family wealth by fighting predatory lending practices. She was with us from her home office in Virginia.

Ladies, thank you both so much for speaking with us.

MCCALL: Thank you.

PANAMENO: Thank you.

(SOUNDBITE OF MUSIC)

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