Your Money

Fed Rules Could End Instant Credit

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The practice of getting instant credit and a discount at the cash register could disappear early next year if a proposed government rule goes into effect. Retailers say the new restrictions would make it all but impossible to grant credit on the spot. NPR's Wendy Kaufman reports.


NPR's business news starts with tougher rules for instant credit.

(Soundbite of music)

MONTAGNE: Many gifts given and received this holiday season were paid for with credit cards, some of them issued right at the cash register. But giving out instant credit could soon become more difficult for retailers.

NPR's Wendy Kaufman explains.

WENDY KAUFMAN: The ritual as you go through the checkout line at department stores and discounters is familiar.

Unidentified Woman: Hi.

KAUFMAN: The clerk scans the items, puts them in a bag, and often asks if you want to save 10 percent today by opening a credit card account. If so, you provide an existing card, a driver's license, and if you have a good credit score, you get credit instantly.

But a proposal by the Federal Reserve Board would put a crimp in that process. Under the rules, retailers would have to consider a consumer's income or assets before they say yes. And the National Retail Federation's Mallory Duncan says that would make it all but impossible to grant credit on the spot.

Mr. MALLORY DUNCAN (Senior Vice President, National Retail Federation): Can you imagine if the clerk is asking you for your asset sheet? Most people don't carry that around in their purse. And many people would feel uncomfortable giving their pay stub to a clerk.

KAUFMAN: Retailers, he says, oppose the new rules. They want to keep that instant credit pipeline flowing.

Mr. DUNCAN: It let's us establish a relationship with that consumer.

KAUFMAN: But while retailers are bemoaning the new rules, which are slated to go into effect in late February, many consumer advocates say tougher rules for creditors are long overdue.

Wendy Kaufman, NPR News, Seattle.

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