Retailers urge Federal Reserve to drop credit debt reduction rule

The Federal Reserve announced earlier this week it plans to enact a proposed rule that would would require credit card issuers to consider a borrower’s independent income rather than household income when assessing new applications.

However, the measure is being met with scrutiny by retailers such as Dress Barn, Home Depot and Citigroup, which are asking the Federal Reserve to drop the initiative.

Proponents of the bill say it would limit consumers from racking up credit card debt, by mandating that they have a form of income with which to pay back lenders, The Wall Street Journal reports. Retailers say the measure will make it more difficult for some customers, especially stay-at-home moms, to apply for store-brand cards.

“[The new regulation is] intended to enhance protections for consumers and to resolve areas of uncertainty so that card issuers fully understand their compliance obligations,” the Federal Reserve said in a statement, according to the news source.

The companies plan to fight the bill, as store issued payment options have recently become a big growth sector for the retail industry. Recent research indicates these shoppers spend more and accumulate more credit card debt with the cards.