Making Credit Work for Women

It wasn't until approximately 50 years ago that women began to gain access to financial independence in a meaningful way. This pivotal transformation was largely catalyzed by the passage of the Equal Credit Opportunity Act (ECOA) in 1974, which allowed women to obtain their own credit cards without needing their husband’s signature or approval. Prior to this landmark legislation, the prevailing societal norms in America adhered to deeply outdated and patriarchal ideas about the concept of marriage and financial autonomy. In the eyes of creditors, women were still seen as commodities passed between families (fathers to husbands) without any rights of their own. Women were meant to stay in the kitchen, if you will, while men made the financial decisions in the home. Cynically, I think creditors see women as uneducated, or worse yet, lacking the capacity for education in such complicated things. As such, the responsibility of debt was far too much for a woman and a father or husband needed to either have the credit card in his name or sign off that they would chaperone their wives through the ownership of a credit card. 

There are several problems here, not least of which are the entrenched misogyny and the assumption of a heteronormative household structure, but less overtly, women were systematically denied the opportunity to build their own credit histories and establish credit scores in their names. This lack of financial identity. meant that should she become widowed or divorced, she would have to return home to father because without these things, she would not be granted a car loan or a mortgage or be able to care for the children.  Without a credit history, her prospects for independence were severely limited, trapping her in a cycle of dependency and vulnerability.

All's well that ends well, right? Not so fast. Lenders still would find a way to disenfranchise women.  Even though women could technically apply for credit cards without their husbands' legal permission after the act was passed, lenders found reasons to deny them (race, color, religion, national origin, age, use of public assistance programs, you name it) …and these reasons weren’t ones they shared with the person being denied. Hillary Clinton was once denied a credit card, and they did give her a reason – that she could not apply for a credit card, that she needed to use her husband’s. This was after ECOA was passed, meaning this company either wasn’t up on recent politics or deliberately tried to bamboozle Mrs. Clinton. The ECOA was amended several times after its initial passage to strengthen its protections and limit these loopholes as well that allowed such discriminatory practices to persist.

It seems that politicians have tried to even the playing field but that the laws have had a limited effect because there are many inequities in the ways women are given credit lines vs men. For example, in 2012, “a FINRA Investor Education Foundation Study found that women pay roughly half a percentage point more in interest on their credit cards than men, regardless of their financial literacy level and other demographic characteristics like income and education.” (Saks). These inequities cause real consequences for women. In their 2003 book mother and daughter duo Elizabeth and Amelia Warren Tyagi wrote that in the limited amount of time that women have been allowed to have their own credit cards, the number of single-filing women declaring bankruptcy has grown by more than 600%. This is astonishing and, contrary to what some may argue, does not prove the personal irresponsibility and inability of women to have credit cards but rather, it underscores the reality that the existing credit system was not designed with women's needs and circumstances in mind.

Personally, I never carry cash nor use my debit card, as I trust that my credit card issuers have implemented stronger security measures against fraudulent purchases compared to my debit card. Additionally, I benefit from rewards associated with my credit card usage that are not available through my debit card transactions. However, I am diligent about paying my entire balance before the due date, as carrying a balance—especially one exceeding 30% of my credit limit—can adversely affect my credit score.

Here’s the crazy thing, despite women holding nearly 75% of discretionary spend, they are the ones with higher interest rates, greater chances of denial, lower credit limits, and lower credit scores…not to mention that we have to spend more between the pink tax and the taxation of necessities like tampons as luxury goods despite earning just $0.55 for every dollar that a White man earns (The statistic about women earning $0.55 for every dollar a White man earns refers specifically to Hispanic women. The statistic for Black women is $0.67, $0.80 for White and Asian women).

The point is, credit cards weren't created for us, but given the systemic inequities we face, we will use them to our advantage, that is a promise.

Sources Saks Frankel, R. (2024, December 6). History of women and credit cards: 1970s to present. Forbes. https://www.forbes.com/advisor/credit-cards/when-could-women-get-credit-cards/ 

Tyagi, A.W., & Warren, E. (2003). The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke.