New Credit Card Regulations Irk Some Retailers

   

Posted: Feb 23, 2010

A credit score plays an important part in a consumer's ability to get a credit card, but new regulations may now require lenders get even more information about people.

According to a recent report from the Washington Post, retailers are bristling at new regulations issued by the Federal Reserve Board that require lenders to take into account a person's income before opening an account. Retailers have long offered their customers instant approval for a store-branded card, which is coupled with a discount on the purchase a consumer is making at the time.

The extra requirements from the Fed could make the process of getting a retail credit card longer, which could dissuade people from getting them, as could the need to disclose personal income information.

"If this practice discourages the use of consumer credit, it will have a negative impact on retail sales and will result in a slower rate of recovery from the ongoing recession," Steven Franks, senior counsel for Macy's, wrote in a letter to the Fed that was quoted by the Post.

Meanwhile, consumers are having a harder time paying off their store-branded cards. According to Fitch Ratings, defaults on these cards went up to 12.56 percent in November.