“Household” income no more a critical criteria for credit card issuers
On Friday, the Federal Reserve announced that credit card lenders cannot evaluate the repaying ability of the applicant based on the “household” income. All credit card application forms, till date, had the “household” income section that needed to be filled by the applicants. Credit card issuers used to take this figure into consideration, in addition to the credit history of the applicant before either approving or rejecting the request for a credit card. This information was also used by the issuers to set the spending limit on the card for applicants.
However, with the Federal Reserve’s announcement on Friday, things are bound to change now. Credit card companies should consider the individual income of the applicant before approval. This seems to be a better idea as compared to considering the “household” income because, at the end of the day, it is the individual who has to pay off the debts on his credit card; it is not the responsibility of the people he/she lives with.
This announcement also makes getting credit cards even more difficult for people with lesser income. Those who were looking to go in for that platinum card or interest free balance transfer card may have to rethink if their income is limited. The applicants who do get the required approval for the credit cards may have to be content with the credit limit that is decided by the bank. Going forward, the banks will only have to consider the credit report, individual income and credit score while approving the application and setting spending limits.
Latest Credit Card Issuers News
Continuing to live in the present reality and the ongoing COVID-19 pandemic, global giants of the financial and credit sector introduce new bonuses for the convenience of their customers. Mastercard, in turn, has announced new partnerships with DoorDash and HelloFresh offering new food and grocery delivery perks to Mastercard World and World Elite cardholders. According […]
Walgreens has recently announced its plans to enter the consumer financial services market. To be precise, the second-largest pharmacy store chain in the United States is going to start issuing credit cards and prepaid debit cards under its brand. The main reason for this expansion of the scope of activity is the losses incurred by […]
Very soon Apple fans will get an opportunity to purchase such devices as Mac, iPad, AirPods, the Apple Pencil, and more at a 0% interest payment plan. This weekend, Bloomberg shared the information that Apple Inc. was about to offer a 0% financial option on its Apple Card credit card by Goldman Sachs®. The new […]
In April, Mastercard conducted a global online survey aimed at studying changes in customer behavior during the COVID-19 outbreak. Now even going to the nearest supermarket for essentials may bode the risk of getting infected. Everyone seeks to be careful, observing hygiene measures to maintain health. Thus, it is natural that people’s buying habits have […]
The new COVID-19 virus had a significant negative impact on the economy of the whole world and the United States in particular. Many companies were forced to temporarily or even permanently close, thus leaving their employees with no jobs and livelihoods. However, fortunately, most major banks, lenders and credit unions have not left their customers […]