New rules may make it tougher to get cards like these.
The Federal Reserve is considering new rules that could make it harder for you to get that Target or Macy's card at the register. The proposed restrictions call for retailers to get more financial information from customers about their incomes before handing over a card. The Wall Street Journal (subs req'd) reports:
Macy's Inc., Saks Inc., Best Buy Co. and other retailers are fighting the proposed rules, claiming customers wouldn't be comfortable handing over a pay stub or tax document to a cashier in order to show they can pay their bills.
"Instant credit is important because it is another service that we can offer the customer that the customer considers to be valuable," said Jim Sluzewski, a spokesman for Macy's, which like the other retailers has lodged gripes with the Fed. In the third quarter, more than half of Macy's sales were rung up on store-brand credit cards. Macy's operates more than 850 department stores in 45 U.S. states.
Stores usually grant credit at checkout counters by tapping databases for a customer's credit score. Credit scores don't include income information. Instead, they are based on payment history, which retailers contend is a better indicator of whether someone will pay their bills than how much they earn.
The proposed restrictions are tied to new credit-card legislation signed by the President last spring. The Federal Reserve hasn't set a deadline for finishing the rules but says that going forward — evaluations of credit-worthiness "must include a review of the consumer's income or assets as well as the consumer's current obligations."
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