What will new credit card regulations mean for women?

Disclaimer: I hate credit. It just feels wrong that I’m forced to borrow money from some big credit card company month after month, even if I don’t want or need access to any funds beyond what I hold in my bank account, just so I can improve my “score” and people in society will trust me enough to give me things I need to survive, like the ability to rent an apartment. That being said, I go along with this hair-brained scheme because we live in a capitalist society where no one trusts each other and apparently coming to terms with that is part of being a grownup (along with learning to like the taste of beer and not tittering when someone in a fancy suit and tie uses the phrase “do do”, as in, “those attorneys don’t do pro-bono work, so I’m not quite sure what they do do for charity”). And, oh yeah, because I sort of like being able to rent my own place.

Anyway, this post is not about me! Or my immature, slightly bitter views on credit. It is about a very interesting and important perspective on the new credit card regulations and how they will affect women, written by a smartie smart pants named Bryce Covert. Covert has written a great piece over at the Nation on whether women face a credit crunch under coming (needed) credit card industry reforms, and the genuine dilemma regarding whether, as credit card companies are forced to better evaluate borrower’s ability to use credit, women who stay at home or are divorced, widowed, or abused will have a harder time accessing credit. An excerpt:

“But as the market expanded, so did credit card companies’ predatory practices. And that burden didn’t fall equally on men and women; women are bearing the brunt of it….11 percent of single women with credit card balances pay rates higher than 20 percent, compared to only 6 percent of single men.… Other predators, such as subprime lenders, have also targeted women. While they have the same credit scores, women were 32 percent more likely to receive high-cost subprime mortgages than men across all income and ethnic groups.

Covert explains some of these discrepancies as so:

“Women are targeted for these higher-cost products along with minorities and low-income individuals because they tend to be less financially secure, making them likely targets for higher interest rates.”

Ok. So, given the state of things now, how will new credit regulations affect women?

“Stay-at-home mothers (and, for that matter, stay-at-home fathers) will see their access compromised. A woman at a department store counter without her own income will likely be turned down, and a bank will ask her to involve her husband so the lender can work around the rule. However, if the card she carries is not in her name, she will not be building her own credit history. Divorced or widowed women will therefore find it harder to borrow just when they most need to.

And this could be even worse for women in abusive relationships. With less of a chance to build an independent credit history, and with landlords and some employers running credit checks, abused women may have few escape routes”

Covert concludes that, after the new regulations kick in, bankers may end up saying to women who stay at home, “Bring your husband down so we can figure this out.

Also of interest, for those of you who would like to explore this subject in more detail, or prefer consuming your media via audio, Emily Douglas did an interview with the author of this piece on what the new credit card regulations will mean for women. It’s short and to the point, but they discuss things that weren’t covered in the original article, like how credit “democratized” and whether deregulation had any role in extending credit to borrowers who had faced discrimination in the early years of the industry (hint: it didn’t). Worth a listen.

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4 Comments

  1. Posted April 27, 2011 at 4:23 pm | Permalink

    Yes, I identify as a feminist!

    The most honest thing that I can say about sex is that I believe that any and all fantasy is healthy. I need to qualify that with if you are fantasizing about someone or maybe an animal that can’t give consent that acting out your fantasy is a violation of the others rights, but fantasy doesn’t hurt anyone as long as its just fantasy. I allow myself to fantasize about any and everything that turns me on and I don’t get bogged down with guilt about some of the strange things that turn me on.

    Secondly, I beleive that the most important and fundamental sexual relationship that you can have is with yourself. Loving your-self though masturbation supports a healthy sexual identity which I believe is important aspect of enjoying sex and reaching diffrent levels of orgasm. In turn a healthy sexual identity effects and enriches sexual encounters that you have with other people.

  2. Posted April 27, 2011 at 4:57 pm | Permalink

    I don’t like credit, either. At most, I have had one credit card at a time. And so long as I use that one credit card to have the ability to expand my standard of living just enough, I’m okay.

    I saw my father juggle credit cards growing up. He’d have five at a time, use a new card to pay off the existing balance of another when its rates got too high, and play this elaborate game of robbing Peter to pay Paul. That is something I don’t ever want to have happen to me.

  3. Posted April 27, 2011 at 6:04 pm | Permalink

    This is really fascinating, especially that part about all women and minorities being considered larger “risks” than (white) men.

    It seems to me that there are two ways to contemplate the above statement. It could be that women and/or other minorities are more likely to default on their short-term credit, thus costing the card companies money. It could also be that women and/or other minorities are more likely to pay balances off more quickly, thus earning said companies less money in the long run.

    The statistician in me wants to believe the former, the cynic in me wants to believe the latter.

    That whole thing about credit in marriage not transferring to women is total garbage on the part of the credit companies. It would have been nice if that were made a federal offense… But I guess one can only have so much credit reform at one time : – /.

  4. Posted April 27, 2011 at 6:18 pm | Permalink

    As someone who gets cash back and free services from credit card companies at no cost to myself, I tend to like them, but I’m under no illusion that they’re not just waiting for me to slip and pay interest. In that sense they’re always predatory, no matter your situation. They do terribly when we responsibly carry no balance and pay no interest or fees.
    If I were loaning out my money, I wouldn’t consider it discrimination to demand a much higher rate from people who have no solid history of employment, men or women. I wouldn’t consider a stay at home spouse to have the same ability to pay off a loan as that spouse’s money-earning partner. This doesn’t sound like discrimination. It sounds like common sense. It does seem positive that at least now the banks will have to be more clear and upfront as to how much reward they expect for their risk.
    On a side-note. A Farhad Manjoo article recently brought my attention to Prosper.com. Since it’s a personal lending site where you decide who you want to lend your money to, perhaps you could go there and choose to build a portfolio entirely off the recently divorced. Since they measure credit-worthiness on different metrics than the traditional credit rating agencies, you could help people who look like risks to citibank, but sound credit-worthy to you.

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