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This article was last updated Dec 10, 2019. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.
Just over half of married Americans know they can include their spouse’s income on a credit card application, according to a new report from CompareCards.com. That means that millions of cardholders may be settling for unfavorable terms than they deserve from their credit card issuer, including lower credit limits.
The intersection of credit limits and marriage made big headlines recently when multiple high-profile entrepreneurs, including Apple co-founder Steve Wozniak, claimed on Twitter they had qualified for much higher credit limits than their wives when applying for the Apple Card. The tweets caused a firestorm around the new card, issued by Goldman Sachs in partnership with Apple, with many American consumers tweeting about their own experiences and frustrations with the assigning of credit limits. They even spurred the New York Department of Financial Services to announce that it will investigate the Apple Card’s algorithm for gender bias.
We simply don’t know enough about the particulars of these cases to make an informed judgment as to whether gender bias was at play. However, there are many factors that go into setting credit limits, and what you know about the rules surrounding what you can put on a credit card application can go a long way toward determining what you’re offered.
For example, people who are 21 or older are allowed to include their spouse or partner’s income when applying for a credit card. The rule was designed to help stay-at-home spouses receive credit in their name by leveraging their partner’s income, but it applies to everyone.
This latest CompareCards survey was commissioned to gauge consumers’ knowledge of that rule. What we found was not pretty, though it also was not unexpected.
- 53% of married people said it is legal to add your spouse/partner’s income to your own when submitting income on a credit card application (if you’re 21 or older). That number falls to 35% for unmarried people. Overall, 45% of respondents said it was legal.
- Nearly 31% of respondents have included a spouse/partner’s income when applying for a credit card, and 15% said they would have if they knew it was legal.
- Almost 45% of partnered respondents feel they have “complete” access to their spouse or partner’s income, and another 16% said they have “near-complete” access.
- Women are more likely than men to say they have complete access to their spouse/partner’s income, but are less likely to know that it is OK to put that income on a credit card application.
- Nearly 1 in 5 respondents believe that you shouldn’t be able to include your spouse or partner’s income on your credit card application.
What the rule says
When it comes to income and credit card applications, the rules of the road changed in 2013. That year, the Consumer Financial Protection Bureau (CFPB) – a government watchdog agency that oversees financial services in the consumer markets – enacted the rule allowing people to include their spouse or partner’s income on a credit card application.
Here’s how the Bureau described it:
“For credit card applicants who are 21 or older, the Bureau’s revision allows card issuers to consider third-party income if the applicant has a reasonable expectation of access to it. Although today’s rule applies to all such applicants regardless of marital status, the Bureau expects that it will ease access to credit particularly for stay-at-home spouses or partners who have access to a working spouse or partner’s income.”
The intent was to push open the door to credit for millions of Americans. However, it seems that even six years later, most people think that door is still firmly closed.
Why it matters
By not being aware of this rule, people are leaving money on the table. Some may be sabotaging their chances of getting credit altogether, while others are hurting their opportunity to qualify for a higher credit limit.
Consider this scenario:
- Spouse A and Spouse B make a combined $200,000 per year in income.
- Spouse A, who makes $150,000 in income individually, knows that it is OK to list household income on a credit card application and submits an income of $200,000.
- Spouse B, who makes $50,000 in income individually, does not know it is OK to list household income and therefore submits an income of just $50,000.
All things being equal, it is reasonable to assume that Spouse A would be in line to be approved for a far bigger credit line, even though both spouses would, in theory, have access to the same overall income.
If Spouse B’s income is reported as $0 because they stay at home, ignorance of this rule doesn’t just mean a lower credit limit, it might mean they wouldn’t be approved for a credit card at all. That’s the unfortunate scenario this rule revision was created to avoid.
Our survey showed that nearly half of married people did not know about the rule change. Unfortunately, women, who tend to earn less than men and thus would typically be the most likely to benefit from the rule, were less likely to know about it. Just 41% of women were aware of the rule versus nearly 50% of men.
Interestingly, about 1 in 5 survey respondents said that household income should not be able to be used on a credit card application. Married men were the most likely to say so.
The bottom line: Take advantage of the rule but proceed with caution
Just because someone offers to lend you money, that doesn’t mean you should take it.
It’s simple advice, but it’s often forgotten or just ignored. That frequently leads to trouble, and that can certainly be the case when it comes to credit limits.
For example, allowing people to list their household income on a credit card application makes sense in many ways. Our survey showed that about 60% of partnered people said they had at least “near-complete” access to their spouse or partner’s income. Women were most likely to say so, with more than half of women saying that have complete access to their partner’s income. Thus, it seems logical that those partners should be able to leverage that income on a credit card application.
It’s not just about future card applications either. If you just listed your own income rather than your household income when applying for your current cards, consider calling your issuer and asking for a credit limit increase. (Your chances of success are likely higher than you realize. 79% of those who asked for a credit limit increase in the past year got one, according to a CompareCards survey, but just 28% of cardholders had asked.) It’s OK to tell them that you didn’t know that you could include your household income when applying. Our survey is proof that you certainly aren’t alone.
Still, credit cards with higher credit limits shouldn’t be entered into lightly. Handled wisely, they can be a great tool for you. Used poorly, they can cause big trouble. Before you write that household income figure on your application or call your card issuer for a limit increase, make sure that you’re comfortable with handling all that extra credit. If you are, great. If you’ll just see it as a temptation to overspend, maybe you’re better off just settling for that lower credit limit.
CompareCards commissioned Qualtrics to conduct an online survey of 1,030 consumers, with the sample base proportioned to represent the overall population. The survey was fielded November 15-20, 2019.